The Securities and Exchange Commission charged the head of the defunct alcohol industry "Whiskey and Spirits" ETF with defrauding investors.
The SEC charged David Bolton, 43, of Nashville, Tenn., with defrauding investors using Millennia Shares LLC, a firm he formed in Bowling Green, Ky., to create and operate exchange-traded funds.
Between August 2018 and May 2019, Bolton solicited 10 investors who invested about $800,000 in Millennia, the SEC said.
Instead of creating ETFs, however, Bolton misappropriated at least $215,000, or more than a quarter of the investor-contributed funds, for his personal use, the SEC said in its complaint.
Bolton “fraudulently diverted investor funds to himself” in amounts that exceeded his salary, which he told investors would be between $7,000 and $10,000 monthly, the agency said.
“Bolton plundered a total sum of at least $215,000—over a quarter of all investor funds—from company bank accounts.,” the SEC’s complaint states.
After investors sent money to Millennia Shares, Bolton withdrew cash or arranged fund transfers from company bank accounts in amounts that far exceeded his disclosed compensation, the SEC said.
“Bolton did this through numerous, irregular, and sometimes small transactions that he orchestrated, and also by diverting large lump sums of over $20,000 each, all of which he used for personal expenses including, for example, a wedding ring,” the SEC said.
Bolton also fraudulently took investor funds by receiving payments that ostensibly constituted salary to another Millennia Shares employee who already had resigned from the company and stopped all work activity, the agency alleged.
In late 2019, Millennia Shares ceased operations without ever having issued any ETFs. Bolton then “took for himself a large sum of investor funds when he emptied the company’s bank accounts," the SEC’s complaint said.