SEC News

SEC Charges Unregistered Investment Adviser with Defrauding Investors in Decade-Long Scheme

The Securities and Exchange Commission today charged George Heckler, of Charleston, South Carolina, for operating a decade-long investment adviser fraud through two private hedge funds, Cassatt Short Term Trading Fund LP (Cassatt) and CV Special Opportunity Fund LP (CV Special), that Heckler formed to conceal massive losses incurred by Conestoga Holdings LP (Conestoga), another fund controlled by Heckler.

According to the SEC’s complaint, Heckler, after forming Cassatt and CV Special, transferred Conestoga’s poorly performing assets to those funds and then misrepresented the funds’ objectives and performance to Cassatt and CV Special investors. The complaint alleges that, between 2009 and 2019, Heckler falsely told investors that their funds were being used to engage in very short-term equity trading and that the investments were consistently generating positive returns. In truth, according to the complaint, a substantial amount of investors’ funds had not been invested at all or had been used to make Ponzi-like payments to prior investors. According to the complaint, Heckler raised at least $90 million in new investor capital through Cassatt, CV Special, and three other entities he controlled, of which over $32 million was used to repay or redeem prior investors. In addition, the Commission alleges that Heckler took over $1 million for his personal use, and Cassatt and CV Special suffered significant losses as a result of poor investments by Heckler. Heckler also allegedly concealed these losses from investors by providing them with false account statements showing fictitious gains.

“Clients should be able to trust their investment adviser will invest their assets as promised and tell them the truth about their investments’ performance,” said Scott A. Thompson, Acting Co-Regional Director of the SEC’s Philadelphia Regional Office. “We allege that Mr. Heckler violated this trust, breached his duties to his clients and lied to cover up his investment losses, and investors lost millions of dollars.”

The SEC’s complaint charges Heckler with violations of the antifraud provisions of the federal securities laws. Heckler has agreed to settle the SEC’s charges by consenting to a bifurcated judgment that permanently enjoins him from future violations of the charged provisions and bars him from the securities industry, with disgorgement and penalties to be resolved at a future date.

On March 9, 2021, Heckler pleaded guilty for related criminal conduct in federal court in the District of New Jersey.

The SEC’s investigation was conducted by Julia C. Green, Burk Burnett, and Dustin E. Ruta, and supervised by Scott A. Thompson. John V. Donnelly III and Mark R. Sylvester will lead the litigation. This matter arose out of a referral from the Philadelphia Regional Office’s Examination Program. The SEC appreciates the assistance of the United States Attorney’s Office for the District of New Jersey and the Federal Bureau of Investigation.

Original Article

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