Related: Wild Day in Wilmington
"SEC freezes assets of adviser accused of theft" by Beth Healy | Globe Staff March 19, 2013
Federal securities regulators have frozen the assets of a Massachusetts man who is accused of stealing $1.1 million from investors by convincing them he ran a hedge fund.
Investment adviser Gregg D. Caplitz and his Insight Onsite Strategic Management in Wilmington transferred money from clients to another executive at the firm, whose family spent the funds at restaurants and gas stations and on legal bills, according to a complaint unsealed Monday in US District Court in Boston.
The company reported in filings with the Securities and Exchange Commission that it had $100 million in assets under management. But it in fact has no assets, the SEC said.
“Caplitz and his firm conjured up a hedge fund to lure longtime clients into investing substantial amounts of money that became nothing more than a slush fund to pay bills for others,” said Julie M. Riewe, deputy chief of the SEC Enforcement Division’s Asset Management Unit.
A lawyer for Caplitz said he had just received the case and was not prepared to comment.
According to the SEC, the alleged scheme began around 2009. Caplitz convinced one client and his wife to invest $275,000 in the hedge fund that he claimed would generate about $1,000 per month in returns, regulators said. Caplitz also allegedly obtained funds from the retirement account of a 20-year client.
The SEC alleged that instead of investing the clients’ funds, Caplitz transferred their money to Rosalind Herman of Las Vegas, a friend who works at the firm. Investor funds also were transferred to her sons and another company.
The complaint seeks a permanent injunction against Caplitz and his associates, a return of the investors’ money, and a fine.
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UPDATE:
"A Woburn man who defrauded clients out of $1.3 million by convincing them to invest in a hedge fund that didn’t exist has been sentenced to 3½ years in prison. Federal prosecutors say 57-year-old Gregg Caplitz was also sentenced Tuesday to three years of probation and ordered to pay restitution. He had previously pleaded guilty to charges including investment adviser fraud, wire fraud, and submitting false statements to the Securities and Exchange Commission. Prosecutors say Caplitz and a business partner pitched a hedge fund investment to existing clients, but the hedge fund didn’t exist and they used the money for personal expenses. Much of the money lost by more than a dozen victims was retirement savings. The partner has also been convicted and is awaiting sentencing."
