Chicago Investment Advisor Charged with Fraud for Allegedly Misappropriating More Than $1.5 Million in Client Funds
CHICAGO — The owner of Chicago financial firms defrauded dozens of clients out of more than $1.5 million by pocketing most of their money instead of investing it, according to federal criminal charges filed today.
Between 2010 and 2013, CLAYTON ANDREW COHN controlled Chicago-based Marketaction Inc., Marketaction Advisors LLC, and the hedge fund Marketaction Capital Management LLC. During this period, Cohn told potential investors that his firms were thriving from particular trading strategies, and that it had stakes in numerous private equity investments, when in reality there was very little investment activity, according to a criminal information filed in U.S. District Court in Chicago. During this time, Cohn made only minimal investments and instead misappropriated a large amount of his clients’ funds for his own personal benefit, the information states. Approximately 37 investors sustained losses of more than $1.5 million, according to the information.
The information charges Cohn, 29, of Chicago, with one count of wire fraud. An arraignment is scheduled for May 26, 2016, at 10:00 a.m., in federal court in Chicago.
According to the information, Cohn falsely represented to investors and prospective clients that redemption of their investments would be “simple” and “easy,” and would be available on a monthly basis. Cohn also deceived investors by distributing account statements that falsely stated the value of investor accounts, the information states.
Cohn falsely maintained that Marketaction retained a “fund accountant” to calculate the value of the fund, and an “auditor” to annually inspect it, according to the information. Cohn prepared and filed with the U.S. Securities and Exchange Commission false and misleading reports about his hedge fund, including how it was subject to annual audits, according to the information.
The information was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Michael J. Anderson, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.
In August 2013 the SEC, which provided helpful information to the criminal investigation, filed a civil lawsuit against Cohn and Marketaction Advisors LLC.
Wire fraud carries a maximum penalty of 20 years in prison, restitution to be determined by the Court, and a fine of up to $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater.
The public is reminded that an information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.
The government is represented by Assistant United States Attorney Daniel Gillogly.