Schoenberger falsely told prospective investors that LandColt would repay the notes through fees earned from managing a private fund. He never actually launched the fund, never had the commitments of more than $40 million in capital that he claimed, and never paid investors the returns he promised, the complaint said.
To settle the SEC’s charges, Schoenberger agreed to pay $65,000 in disgorgement of ill-gotten gains and consented to an order barring him from associating with any broker, dealer or investment adviser and from serving as an officer or director of any public company.
Based on these two cases and others, the SEC is warning investors to thoroughly check the claimed credentials of people soliciting investments to ensure they are not falsifying, exaggerating or hiding facts about their backgrounds.
“Do not trust someone with your investment money just because he or she claims to have impressive credentials or experience, or manages to create a ‘buzz of success,’” the SEC said.
The SEC alert notes that investors sometimes unintentionally contribute to a fraudster’s false reputation of success and accomplishment by merely repeating to others the misrepresentations being made to them.
Investors can conduct background checks of financial professionals to ensure they are properly licensed or registered with the SEC, Finra or a state regulatory authority by visiting the Ask and Check section of the SEC’s investor.gov website.
“Advisors looking to raise funds cannot lie about their backgrounds to lull investors into a false sense of security about their purported expertise or the profitability of a potential investment,” said Julie M. Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit.