An Indianapolis-area advisor allegedly sold $13 million “high risk” securities to her clients who were mostly teachers and retirees, according to the U.S. Securities and Exchange Commission.
Tamara Steele, 49, and her firm, Pendleton, Ind.-based Steele Financial Inc., were accused on Friday of fraud in selling more than $13 million of securities from Behavioral Recognition Systems Inc., a private company charged in December with fraud by the SEC, to advisory clients while earning more than $2.5 million in commissions, according to a complaint filed in the U.S. District Court for the southern district of Indiana, Indianapolis Division.
The SEC’s complaint in the Steele matter indicates that from 2012 to 2016, Steele and her firm targeted their own advisory clients who did not invest in individual stocks, selling them more than $13 million of the securities without disclosing that they were receiving 8 percent to 18 percent commissions from BRS securities. During the same period, the defendants allegedly sold another $2 million of BRS placements to non-advisory clients.
In December 2017, BRS and its CEO, Ray Davis, were charged by the SEC with fraudulently raising more than $28 million from investors while allegedly diverting more than $7.8 million of those proceeds for Davis’s own benefit. Davis is alleged to have bought ancient jewelry, gold and artifacts with the ill-gotten money, as well as funding a joint bank account shared with his wife.
Steele and her firm allegedly created false invoices and took other steps to conceal their involvement in selling BRS securities, according to the SEC.
The SEC also alleges that Steele and her associates were acting as brokers for BRS securities without registering for the commissions.
The SEC charged Steele with violations of the Investment Advisers Act, the Securities Act and the Exchange Act. In its case, the Commission seeks disgorgement of ill-gotten gains, civil penalties and an order restraining Steele and her firm from conducting similar behavior in the future.