On July 4, 2016, Drake allegedly confessed to his deception to the wife, admitted that there were no “VIP” advisory fees at HCR and that they had been paying higher fees than they had been told. The SEC alleges that Drake asked the clients to lie to Schwab about the sources of the fabricated documents so that he could keep acting as an advisor, warning the wife that escalating their inquiry could result in bad publicity.
Nevertheless, the wife persisted in asking her questions, according to the SEC’s complaint. HCR terminated Drake on July 8, 2016.
In its litigation, the SEC requested that the court order Drake to pay disgorgement, interest and civil penalties, and hand down other penalties as may be necessary.