Washington, D.C., Feb. 4, 2009 (LAWFUEL) – The Securities and Exchange Commission has taken emergency action against a private fund manager in Gilberts, Ill., alleging that he fraudulently obtained at least $10 million from approximately 300 investors and misappropriated the funds for personal use and to pay purported returns to investors.
The SEC alleges that Scott M. Ross was fraudulently soliciting investments since 2007 in three purported private investment funds that he managed. The SEC has obtained an emergency court order freezing Ross’s assets and appointing a receiver.
“By taking swift and decisive action to stop this fraudulent scheme and freeze assets, the Commission has preserved potentially millions of dollars of investor assets and protected investors from further harm,” said Merri Jo Gillette, Regional Director of the SEC’s Chicago Regional Office.
According to the SEC’s complaint, Ross raised approximately $2 million from investors for the Elucido Fund LP, telling investors that Elucido would invest in life settlement contracts. The SEC also alleges that Ross raised approximately $2 million from investors for a second fund that was to be used to purchase stock in a company called Moondoggie Technologies. Finally, the SEC alleges that Ross raised between $6 million and $7 million for the Maize Fund LP, telling investors that their money would be pooled and invested in a Forex Account in which traders would engage in arbitrage currency trading.
The SEC alleges that Ross misappropriated approximately $2 million from Elucido and an undetermined sum in connection with the Moondoggie Technology stock purchases. Among other things, Ross used misappropriated funds to purchase a skybox at Lucas Oil Stadium in Indianapolis.
The SEC’s complaint alleges that Ross violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to emergency relief, the Commission’s complaint seeks disgorgement of Ross’s ill-gotten gains, prejudgment interest and a civil penalty.
Ross consented to the emergency relief sought by the SEC and the Honorable James B. Zagel, U.S. District Court for the Northern District of Illinois, issued an order permanently enjoining Ross from further violations, freezing his assets and appointing Philip L. Stern of the law firm of Neal Gerber & Eisenberg LLP as receiver in the matter