The Securities and Exchange Commission has filed civil charges against the estate and business of a deceased advisor for allegedly operating a fraudulent multiyear investment offering that raised $29.3 million from more than 50 investors.
The SEC said the estate of the late Stephen Romney Swensen, 50, of Kaysville, Utah, “continues to violate the federal securities laws by disseminating false and misleading statements to investors” on its website. In addition to his businesses, the complaint named Swensen’s widow, Wendy Swensen, 51, Saria Rodriguez, 30, also of Utah, and three other businesses with ties to Swensen as relief defendants. Both received proceeds from Swensen’s fraud, for which they had “no legitimate claim,” the complaint said.
The agency alleged that investors money is still "being spent and otherwise dissipated" by Swensen's business, Crew Capital Group in Nevada, and the relief defendants.
The complaint alleged that Swensen, who died June 6, falsely convinced investors from 2011 until his death to invest in Crew Capital Group, a limited liability company he created in 2010 that the SEC said had no actual business operations other than Swensen’s efforts to raise investments for the entity.
Swensen fraudulently induced investors to invest in Crew Capital, telling them that it was a safe investment fund that guaranteed a minimum of 5% annually, and up to 10% depending on the performance of the S&P 500 index, according to the complaint, filed in U.S. District Court for the District of Utah on Tuesday. He also told investors that Crew Capital invested in various securities, including bank loans and options on the S&P 500 index, and that the firm was the safest investment in their portfolios, the complaint said.
Certain investors also were told that their investments would be “safest” in a fund at the Bank of Utah, but there was no such fund, the complaint said, noting that after investors sent money to their accounts at the Bank of Utah, Swensen transferred the funds to a Crew Capital account, which was maintained at Wells Fargo Bank.
Swensen duped investors into sending him money by personal and cashier’s checks payable to Crew Capital, by wiring funds directly to Crew Capital’s accounts at Wells Fargo Bank, and by signing documentation authorizing the transfer of funds into Crew Capital’s account directly from the investor’s other investment or retirement accounts, the complaint said.
Investors also were instructed to open self-directed IRA accounts at the Bank of Utah and were told to sign a letter of authorization so that Swensen could have access to the funds in the IRA accounts, the SEC said. Once the money hit their accounts, Swensen instructed the Bank of Utah to wire the funds to Crew Capital’s account at Wells Fargo Bank, the complaint said.
Swensen provided investors with bogus written documentations about the fictitious Crew Capital investment to help conceal the fraud and paid a graphic design company to create a formal logo, which he used on Crew Capital documentation, the complaint said. The documentations described Crew Capital as an “actively managed portfolio” that invested both in senior secured floating rate loans and options on the S&P 500 index, with some documents falsely naming Pacific Investment Management Company LLC (PIMCO) as a co-manager to Crew Capital, the SEC said.
The complaint said at the time of his death, Swensen had raised at least $29.3 million in investor funds through the fraudulent schemes.