Fraud, securities law violation accusations levied against high-profile Baltimore advisor

Rousseaux also misrepresented the fee structure of a proprietary investment model, according to the Order, which it should be noted does not include allegations of misappropriated funds.

“When investment promises sound too good to be true, they almost always are,” Attorney General Frosh said. “Consumers need to be on the lookout for slick advertising campaigns that highlight the upside while minimizing the risk of the investment program. We took this step to stop these activities and to raise awareness of these misleading tactics. We also want to prevent unlawful activities in the future.”

Rousseaux and his companies face multiple counts of Maryland securities law violations, including fraud in connection with the offer, sale or purchase of securities; fraud in connection with the offer and sale of investment advice; dishonest and unethical practices; and acting as an unregistered investment adviser.

According to additional allegations contained in the Order, Rousseaux and the companies:

• Misrepresented the total amount of assets Everest Investment Advisors was managing, making the company look larger for marketing purposes.
• Falsified forms used to transfer client assets from one institution to another, reducing the opportunity for clients to change their minds after agreeing to do business with him.
• Created a new investment program called the Everest Dynamic Growth Model in 2013, telling customers the program outperformed the Standard & Poor’s 500 Index by 37 percent over a 10-year period. But he knowingly used performance figures that did not reflect his investment strategy, did not tell customers they were based on a retroactive calculation, and did not reflect actual results.

The administrative allegations are a result of findings obtained during audits by the Securities Division of the Office of the Maryland Attorney General dating to 2012 and subsequent investigations. Rousseaux will have an opportunity to respond to the allegations through an administrative hearing process that will determine whether the Maryland Securities Commissioner will impose the proposed penalties, which include fines (up to $5,000 per violation) and a permanent ban on doing investment advisory business in Maryland.

Among the lessons? Don’t market yourself primarily as an insurance agent offering fixed indexed annuities and then have every intention of also providing investment services, especially if you are not registered as an investment advisor in the very state where you do the majority of your business.

And if regulators are giving you warnings, you might want to pay attention to them and do whatever it takes to become compliant immediately.