The SEC filed civil fraud charges Wednesday against a former investment advisor who defrauded professional athletes and received more than $1.5 million in undisclosed compensation and kickbacks.
San Diego resident Bill C. (Billy) Crafton has already pleaded guilty to criminal charges stemming from the scheme and has agreed to the SEC sanctions sought in the complaint.
Crafton provided financial services to professional athletes in Major League Baseball, the National Football League, the National Hockey League and the National Basketball Association, according to the SEC.
From at least 2006 to 2010, Crafton received more than $1.5 million in undisclosed compensation and brokerage commissions from the principals of certain funds and businesses in exchange for recommending that his clients invest in those enterprises, the SEC says in the complaint filed in U.S. District Court for the Southern District of California. In some instances, Crafton falsely told his clients that he was not receiving compensation in connection with client transactions.
The SEC further charges that Crafton, who was the sole owner of Martin Kelly Capital Management, defrauded clients in June 2010 when he arranged through forged wire transfer authorizations for two of his clients to purchase a third client's $700,000 position in a fund. Crafton knew the fund had been the subject of an asset freeze obtained by the SEC four days earlier for allegedly operating as a Ponzi scheme, according to the SEC.
Crafton has agreed to be permanently barred from working with any financial services person or firm and participating in any penny stock offering. He has agreed to pay $1.5 million in disgorgement and nearly $200,000 in interest, according to the SEC.