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SEC Freezes Georgia-Based Investment Adviser's Assets Over $40M Investment Fraud Scam

Marnie C. Lambert, Esq.

A Georgia-based investment adviser had his assets frozen on Monday after the SEC made allegations that he was running an ongoing offering and investment advisory fraud scheme. According to the SEC, Aubrey Lee Price fraudulently sold $40 million worth of membership interests in two unregistered investment funds (PFG, LLC and PFGBI, LLC) to approximately 115 investors. The Complaint, filed Monday, also names as defendants: PFG, PFGBI, Montgomery Asset Investment Adviser, and Montgomery Asset Managing Member, all of which the SEC says were under Price’s control.

“Although created as separate entities, there was an extreme intermingling of corporate forms, roles and statements between PFG, PFGBI, Montgomery Asset Investment Adviser and Montgomery Asset Managing Member, showing a concerted scheme all masterminded by Price,” alleged the SEC in the Complaint.

According to the SEC, Price formed PFG in January 2008. The firm’s private placement memorandum stated that its objective was to achieve “positive total returns with low volatility.” The offering documents also represented that investor funds would be kept in a custodial account at Goldman Sachs Execution & Clearing, L.P.

While $36.9 million were placed in a securities trading account with Goldman Sachs, the account subsequently suffered “massive trading losses.” The SEC alleges that Price and PFG misled investors about these losses by preparing and distributing falsified account statements, which showed fictitious investment returns. Some funds also were allegedly removed from the account without investors’ knowledge. The Complaint also accuses Price of using PFGBI to misappropriate “substantially all” of a failing South Georgia bank’s reserves.

Though the SEC succeeded in freezing Price’s assets, it seems he has now gone into hiding. As reported by one Village Voice blogger, Price was last seen June 16 boarding a ferry headed to Fort Meyers, Florida. Federal authorities have reason to suspect he may have left the country. Anyone knowing his whereabouts has been asked to contact the FBI’s New York office at (212) 384-1000.