The Securities and Exchange Commission today announced fraud charges and an asset freeze against Fort Lauderdale, Florida-based investment advisory firm, its manager, and three related funds in a scheme that raised more than $17 million since November 2013. In a complaint filed last in the Southern District of Florida, the SEC charges that Elm Tree Investment Advisors LLC, its founder and manager, Frederic Elm, and Elm Tree Investment Fund LP, Elm Tree “e”Conomy Fund LP, and Elm Tree Motion Opportunity LP with violating anti-fraud provisions of federal securities laws and SEC anti-fraud rules. The SEC is seeking relief for investors, including return of allegedly ill-gotten gains, with interest, and financial penalties.
Elm, formerly known as Frederic Elmaleh, his unregistered investment advisory firm, and the three funds misled investors and used most of the money raised to make Ponzi-like payments to the investors, according to the SEC complaint. The SEC also alleges that Elm treated the funds as his personal piggy bank by using them buy a $1.75 million home, luxury automobiles, and jewelry, as well as to cover daily living expenses. The SEC named Elm’s wife, Amanda Elm, formerly Elmaleh, as a relief defendant based on her receipt of investor monies.
“Elm misled investors about how he and his funds would use their money and about how much he charged them in fees,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office in an SEC statement. “As a result, Elm was able to wrongfully take millions of dollars from investors without their knowledge.”
The Honorable William Dimitrouleas granted the SEC’s request for a temporary restraining order and temporary asset freeze against Elm, his firm, and the three Elm Tree funds. Judge Dimitrouleas also ordered a temporary asset freeze against Amanda Elm and required her and the other defendants to provide accountings. In addition, Judge Dimitrouleas appointed Grisel Alonso as receiver for Elm Tree Investment Advisors and the Elm Tree funds. A court hearing has been scheduled for January 29.
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