Twin Advisors Defrauded 60 Clients, SEC Says

Inflated Fees

The SEC's complaint alleged that, among other things, from at least May 2018 through July 2021, the brothers overcharged clients for advisory fees by fraudulently inflating the fee amounts in clients' advisory agreements without the clients' knowledge or consent, so that they could collect higher fees than their clients had agreed to pay.

"In order to perpetrate this aspect of their fraudulent scheme, Defendants orally agreed with clients to charge a certain advisory fee, typically 1% or less," the complaint alleged.

The defendants also "orally agreed to charge several clients 0%, either on a temporary basis as an introductory fee, or due to a personal relationship," according to the complaint. But the brothers "fraudulently caused these clients to pay higher advisory fees — ranging from 1.25% to 2.95%," the complaint said.

The complaint also alleged that, from at least May 2018 through at least October 2022, they misappropriated clients' funds by fraudulently applying charges to their clients' credit cards and bank accounts for, among other things, purported investments or additional advisory fees to which the brothers were not entitled.

The defendants allegedly used the clients' funds obtained from those fraudulent activities for their personal benefit and to repay certain clients who complained about unusual activities in their accounts.

The complaint also alleged that the twins falsified documents and made Ponzi-like payments to clients to conceal their fraudulent activities.

The brothers were charged with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks injunctions, disgorgement plus prejudgment interest and civil penalties.