On Tuesday, August 22, 2017, the Securities and Exchange Commission announced charges against investment advisor Jeremy Drake with defrauding two clients. The clients include a high-profile athlete and his wife. Drake has been accused of deceiving the couple about the investment advisory fees they were paying. The SEC accuses Drake of going to great lengths to conceal his fraud, including creating and sending false documents and pretending to be another individual to corroborate the lies.
At the time of the alleged crime, the SEC believes that Drake was working with the Los Angeles-based firm HCR Wealth Advisors. The SEC suggests Drake deceived his clients for more than three years, by telling them they were paying a special “VIP” annual rate of 0.15 to 0.20 percent of their assets under management. In reality, they paid 1 percent.
In return, the deception caused the clients to pay $1.2 million more in fees than Drake initially represented. During the course of the scheme, it is believed that Drake received roughly $900,000 of compensation based on the fees paid. Drake is accused of lying to clients and their representatives repeatedly. The SEC believes that Drake sent false and misleading emails, fee reports and other fraudulent documents to these individuals.
He is also accused of creating a persona, “Ron Stenson”, to corroborate his story. It is alleged that Drake’s actions were eventually discovered. When approached by one of the clients, Drake is accused of admitting to the deception and warning the client that his misconduct could lead to bad publicity for her husband.
The SEC is seeking a permanent injunction against the defendant. They will also attempt to force Drake to return the allegedly ill-gotten gains as well as interest and penalties.