The complaint did not name the players.
As alleged, the defendants represented that Reinhard was an “extremely successful investment manager,” but kept investors in the dark about his criminal and regulatory history. Reinhard, the complaint said had served jail time for bankruptcy and tax fraud, and had been barred by the SEC from working for any investment advisor firm.
The SEC further alleged that Howard defrauded investors by borrowing $612,000 in undisclosed personal mortgage loans from the funds, which he never repaid, and that Howard and Reinhard used investor funds to pay themselves fabricated “broker fees” on settlement advance loans to Howard’s legal clients.
The SEC’s complaint filed in federal district court in the Northern District of Florida charges Howard, Reinhard, and Cambridge with violating the anti-fraud provisions of the federal securities laws, and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains, prejudgment interest, and financial penalties