The Securities and Exchange Commission on Tuesday charged an investment advisor with defrauding a high-profile professional athlete and his wife by deceiving them about how much in investment advisory fees they were paying.
Jeremy Drake, formerly of Los Angeles-based HCR Wealth Advisors, deceived the clients for more than three years, telling them that they paid a special "VIP" annual rate of 0.15 to 0.20% of their assets under management when in fact they paid 1%, according to the SEC's complaint.
Drake's deception led the clients to pay $1.2 million more in management fees than Drake represented, the SEC said, with Drake personally receiving approximately $900,000 of incentive-based compensation based on the fees paid by the clients during the course of his deception.
Drake met the clients, who are not named in the complaint, in 2008, when he worked for another investment advisory firm.
The clients ultimately placed more than $35 million of their assets under Drake's management, and Drake was the clients' sole contact at HCR during the time he acted as their advisor, the complaint states.
"As an investment adviser responsible for the day-to-day management of the clients' investments, Drake owed the clients a fiduciary duty," the SEC said.
According to the SEC's complaint filed in the U.S. District Court for the Central District of California, Drake repeatedly lied to the clients and their representatives and sent false and misleading emails, deceptive fee reports, and other fabricated documents.
