The SEC charged trader Gary C. Snisky with defrauding elderly investors by soliciting investments in government-secured agency bonds and then using the invested funds for personal and business expenses, including payments of his mortgage.
According to the SEC complaint filed in Denver's federal court, Snisky raised $3.8 million from over 40 investors through his company, Arete LLC. He recruited veteran insurance salespersons along the way to market the illicit investment to their own annuity-owning clients. As a result, most investors, the target group being retired annuity holders, used funds from their annuities, IRAs, or other retirement accounts.
During the course of this scheme, Snisky marketed his company and the bonds through multiple seminars and other advertisements as a "safe and more profitable alternative to an annuity." According to the SEC, the sales pitch was so convincing that one of Snisky's own salespeople dipped into personal retirement funds to invest in Arete.
The scheme allegedly began with Snisky falsely telling clients that their funds would be used to purchase the aforementioned government-secured bonds at a discount with Snisky personally using his status as a self-proclaimed institutional trader to conduct overnight banking sweeps.
Instead, Snisky allegedly never purchased such bonds or engaged in such trading, instead misappropriating around $2.8 million of the investments to pay commissions and a personal mortgage.
The Commission also discovered that Snisky allegedly created and provided all written documents related to Arete, duping even his salespersons by showing them fraudulent investor account statements showing earnings from the Arete investments. The SEC also charged Snisky with personally hand-delivering fraudulent account statements to investors attending seminars, thereby misleading them into believing their investments were performing as promised.
The SEC seeks permanent injunction, disgorgement of ill-gotten gains and interest and a financial penalty.
If you have invested with Gary C. Snisky, Arete LLC or with any broker, adviser or firm whose investment sales pitch has been misleading, false, fraudulent or has otherwise proven harmful to your financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News: SEC Charges Colorado Man in Scheme Targeting Elderly Investors (U.S. Securities and Exchange Commission Press Release 2013-248)