The Securities and Exchange Commission (SEC) today charged a California investment advisor with operating a $60 million Ponzi scheme that defrauded investors by claiming imaginary and exorbitant trading profits.

The SEC alleges that John A. Geringer, 47, who managed the GLR Growth Fund, used false and misleading marketing materials to convince investors that his fund was earning double-digit annual returns by investing 75% of its assets in investments tied to major stock indices. In reality, Geringer's trading generated consistent losses and he later stopped trading entirely, the SEC says. To mask the fraud, Geringer paid millions of dollars in "returns" to investors largely by using money received from newer investors. He also sent investors periodic account statements showing fictitious growth in their investments.

The SEC's complaint, filed today in federal court in San Jose, claims that Geringer, of Scott Valley, Calif., raised more than $60 million since 2005, mostly from investors in the Santa Cruz area. Geringer used fraudulent marketing materials claiming that the fund had between 17% and 25% annual returns in every year of the fund's operation through investments tied to well-known stock indexes like the S&P 500 and Dow Jones Industrial Average.

Although the fund was started in 2003, marketing materials claimed 25% returns in 2001 and 2002. The marketing materials also falsely indicated a nearly 24% return in 2008 from investing mainly in publicly traded securities, options and commodities, a year in which the S&P 500 Index lost 38.5%, the SEC says.

The SEC also alleges that Geringer's actual securities trading was unsuccessful, and by mid-2009 the fund did not invest in publicly traded securities. Instead, the fund invested heavily in illiquid investments in two private start-up technology companies. The rest of the money was paid to investors in Ponzi-like fashion and to three entities Geringer controlled that also are charged in the SEC's complaint.

"Geringer painted the picture of a successful fund weathering America's financial crisis through a diversified, conservative investment strategy," said Marc Fagel, Director of the SEC's San Francisco Regional Office. "The reality, however, was the complete opposite. Geringer lost millions of dollars in the market, tied up remaining investor funds in a pair of illiquid private companies, and lied about it in phony account statements."

The SEC is seeking financial penalties, disgorgement of ill-gotten gains, preliminary and permanent injunctions, and other relief. Geringer has consented to the entry of a preliminary injunction and a freeze on the fund's bank account. The SEC's investigation is continuing.