On August 10, 2016, the SEC filed a complaint in federal court against Merrill Robertson Jr., a former Philadelphia Eagles football player, with defrauding investors. Mr. Robertson, along with Sherman C. Vaughn, Jr., and the company they co-owned, Cavalier Union Investments LLC, allegedly promised to invest clients’ money in diversified holdings. Instead, they funneled nearly $6 million in investor funds to pay for personal expenses and repay previous investors.
In addition to this misappropriation of funds, the SEC claims that the defendants lied to their investors about the unregistered debt securities they sold. According to the complaint, Robertson, Vaughn, and Cavalier Union Investments did not have any investment funds operated by experienced investment advisers as they claimed. Rather, they hid this fact from investors, utilizing incoming cash from new investors to keep their company funded.
“Our complaint alleges that Robertson and Vaughn preyed on elderly victims and others who placed their trust in these individuals, only to have their savings stolen,” said Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office. “We will continue to aggressively pursue fraudsters who exploit their relationship of trust with victims and promise returns that appear to be too good to be true.”
The SEC is charging Robertson, Vaughn and Cavalier with violations of the anti-fraud and registration provisions of the federal securities laws. In restitution for their alleged actions, the agency is seeking permanent injunctions, the return of any alleged ill-gotten gains with prejudgment interest and civil penalties.
No matter how well-known an adviser is or how trustworthy he may seem, performing due diligence prior to investing is key. At a minimum, research should always be performed to ensure that an investment representative and his/her firm are registered and in good standing with appropriate regulator(s).
For more information on how Core Compliance & Legal Services, Inc. can assist with performing due diligence and implementing controls to help identify and prevent investment fraud, please call us at (619) 278-0020. Thank you.