SEC charges Washington state RIA with multi-million dollar fraud
Regulator says Ronald Fossum Jr. misappropriated assets and lied to investors.
The Securities and Exchange Commission has charged Snohomish, Wash.-based investment adviser Ronald A. Fossum Jr. with fraud, saying he misappropriated fund assets he controlled and misrepresented the financial condition of the funds and his compensation.
According to the SEC’s complaint, from approximately March 2011 to June 2016, Mr. Fossum raised more than $20 million from over 100 investors through unregistered securities offerings of three investment funds he owned and controlled: Accelerated Asset Group, Smart Money Secured Income Fund and Turnkey Investment Fund. The SEC alleges that Mr. Fossum misappropriated hundreds of thousands of dollars of assets from the funds by living rent free in a home owned by one fund and by having the funds pay for extensive international travel and his federal taxes.
The SEC also said that instead of charging a one-time management fee of $2,990 per investment unit sold, Mr. Fossum secretly took $20,000 or more in compensation from each investment.
In addition, the complaint charged that Mr. Fossum induced new investments in the Smart Money Secured Income Fund without disclosing its poor financial condition and repeatedly breached his fiduciary duties to all the funds by “indiscriminately commingling fund assets to satisfy the funds’ liquidity needs.”
According to the SEC’s complaint the three funds filed for bankruptcy in June 2016 and are currently being liquidated by a trustee.
The SEC said it is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and civil penalties, as well as a conduct-based injunction against Mr. Fossum.
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