The Securities and Exchange Commission has charged an advisor with securities fraud who allegedly lied to his friends and family by telling them he was investing their money in a company developing a promising cancer drug.
The SEC charged Christopher T. Vulliez, 38, and his company, Amphor Advisors LLC in New York City, with securities fraud on May 20. The agency obtained an emergency court order to freeze his assets and halt his alleged fraudulent investment scheme.
The SEC's complaint, filed in the Southern District of New York, alleges that between March 2010 and January 2011, Vulliez and Amphor misappropriated at least $700,000 from his closest family and friends. According to the complaint, Vulliez made false and misleading statements to his clients that he would invest their funds in "Amphor Oncology Company LLC," an investment vehicle that would be controlled by Vulliez's parent company Amphor.
Vulliez also told investors that their funds would be used by Amphor Oncology to make an investment in Neogenix, a biotechnology company that was purportedly developing a promising cancer drug.
But in fact, Vulliez and Amphor never invested any of his family and friends' funds into Neogenix, but instead kept the money for his own personal use, a SEC public affairs spokeswoman said.
Vulliez gave each prospective investor a limited liability company agreement for Amphor Oncology. The agreements identified Amphor as the managing member and Vulliez as president and CEO of Amphor, the SEC complaint says. The agreements stated that the broad purpose of Amphor Oncology was to engage in any lawful activity, but also expressly specified as a business purpose the "acquisition of debt or equity interests in Neogenix."
The agreement further stipulated that Amphor "shall have full power and exclusive management and control of the business of the company."
All but one of the agreements provided that profits were to be distributed "pro rata," with investors entitled to receive 100 percent of distributable amounts until they recovered their capital investment and an 8 percent return. Thereafter, investors would share profits on an 80/20 basis with Amphor until they received a return of 30 percent and any additional distributions after that would be shared on a 50/50 basis with Amphor.
In November 2010, Vulliez asked another close friend of over 20 years, to invest in Neogenix. Vulliez told him that Neogenix was a "ten bagger" -- a company whose value could increase ten times over. Vulliez also made representations about Neogenix's business model and the potential associated with its cancer drug under development. Vulliez also told his friend he could not invest directly in Neogenix because the company required a minimum investment that was higher than the amount that his friend wanted to invest.
Vulliez then told his friend that he intended to pool together, through Amphor, the capital invested by his family and friends to meet Neogenix's minimum investment requirement. In late December 2010, the friend sent Vulliez a check for $40,000 to invest in Neogenix.
In early April, family and other friends of Vulliez who had invested in Neogenix became concerned about their money and began making inquiries with the company. One of Vulliez's brothers, who believed he had invested in Neogenix, contacted the company directly and found that the company had no record of any investment in his name or in any Amphor entity. Another investor -- a close friend of Vulliez -- also contacted Neogenix directly and was informed that the company had no record of any investments made by an entity called Amphor.
Then in early May the SEC says that this friend investor and another one of Vulliez's brothers who had invested in Neogenix confronted Vulliez in a meeting at the Waldorf Astoria Hotel in New York, where Vulliez admitted that he had lied to investors about investing their money in Neogenix, and promised the he would sell his own assets to repay them.
Judge Richard M. Berman of the U.S. District Court for the Southern District of New York issued a temporary restraining order, which prohibits Vulliez and Amphor from committing further violations of the federal securities laws and places a freeze on their assets.
The SEC is also seeking additional relief, including orders enjoining Vulliez and Amphor, preliminarily and permanently, from committing future violations of the cited federal securities laws, and a final judgment ordering Vulliez and Amphor to give up their ill-gotten gains, plus prejudgment interest, and assessing civil penalties against them.