This week, the Securities and Exchange Commission announced that it had charged David S. Haddad and two companies he operated in relation with a fraudulent scheme to raise funds from retail investors. The defendants have offered to settle by agreeing to pay a total of more than $1 million. The settlement will include disgorgement of money Haddad took from investors and used for his own personal purposes.
The SEC’s complaint explains that Haddad operated two companies, Trafalgar Square Risk Management LLC and New England RE LLC. The defendant was accused of raising money from investors through the offer and sale of unregistered securities in Trafalgar in or before 2012. Then, the defendant began offering unregistered securities in New England RE in late 2014. Through the offerings, Haddad managed to raise $2.5 million from at least 29 investors.
The SEC alleges that the defendant made various misleading claims to investors about the use of their funds. The SEC claims that Haddad led investors to believe that their money would be used to build and grow both companies. In reality, Haddad was accused of diverting a large portion of the investors’ fund for his own personal purposes. The defendant was accused of purchasing multiple homes, art, antiques, and paying the expenses of a dog rescue charity.
Haddad also used some of the money to make Ponzi-like payments to earlier investors. Additional details can be found here.