The SEC has obtained a temporary court order freezing the assets of a St. Louis investment funds manager and his companies for bilking investors out of $9 million over the course of eight years.
Burton Douglas Morriss and his companies have been charged by the SEC with misappropriating clients' funds for his personal use. The SEC also has obtained a court order appointing a receiver for the companies involved. The SEC is seeking permanent injunctions against Morriss and a return of the illegally obtained money. The orders were issued by Federal District Court in St. Louis last week.
Between 2003 and 2011, Morriss allegedly told investors his private investment funds and management companies would invest their money in a portfolio of financial services and technology companies. Unbeknownst to the investors, Morriss was misappropriating the money and disguising the transfers as loans, according to the SEC.
Morriss was the principal in two private investment funds, MIC VII LLC and Acartha Technology Partners LP and in management firms Gryphon Investments III LLC and Acartha Group LLC. Through them, he raised at least $88 million from at least 97 investors, according to the SEC.
The money was supposed to be invested in early to mid-stage companies in the financial services and technology sectors Instead, a portion of the money was used by Morriss and Morriss Holdings LLC to pay for his personal expenses, including mortgage and alimony payments, pleasure trips and household expenses, the SEC said.
The SEC also said Morriss recruited new investors to purchase membership interests in one of his private investment funds without the unanimous consent of existing investors as required.
-Karen DeMasters