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Regulation and Compliance > Federal Regulation > SEC

Former Apollo Partner Charged With Secretly Billing Clients for Vacations, Salon Visits: Enforcement

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The Securities and Exchange Commission charged Mohammed Ali Rashid, a former senior partner at Apollo Management L.P., with defrauding his fund clients by secretly billing them for approximately $290,000 in personal expenditures – including his family vacations, visits to a hair salon, and purchases of designer clothing and high-end electronics.

The SEC’s complaint alleges that Rashid falsely claimed that certain individuals accompanied him to dinners to make it appear various personal expenses had a business purpose, and he doctored a receipt in an effort to justify his purchase of a $3,500 suit for his father as a business expense.

“As alleged in our complaint, despite earning millions of dollars, Rashid used client money to fund his lifestyle and personal expenses, including family vacations, designer clothing and spa services,” Anthony Kelly, co-chief of the SEC Enforcement Division’s Asset Management Unit, said in a statement. “Rashid knew what he was doing was wrong because he took active steps to conceal his misconduct.”

According to the SEC’s complaint, despite being caught by the firm and told to stop on two occasions in 2010 and 2012, Rashid continued to expense personal items to clients into 2013. After he was confronted about his expenses for a third time, Rashid admitted that he charged approximately $220,000 in personal expenses. A forensic accountant then uncovered additional personal expenses that Rashid improperly charged to clients.

SEC Obtains Judgment Against Real Estate Developer Who Fled After Insider Trading Conviction

The SEC obtained a final judgment against a real estate developer charged with insider trading in the stock of Wainwright Bank & Trust Co.

The judgment orders Robert H. Bray liable for disgorgement of nearly $300,000, the payment of which is deemed satisfied by the order of forfeiture entered in the parallel criminal case against him.

On Aug. 18, 2014, the SEC charged Bray and J. Patrick O’Neill, a former senior vice president at Eastern Bank Corp., with insider trading.

The SEC alleged that O’Neill learned that Eastern Bank, his employer, was going to acquire Wainwright and he tipped Bray, a friend and fellow golfer with whom he socialized at a local country club.

The complaint alleged that Bray liquidated shares in other stocks to free up funds he then used to purchase Wainwright securities. After the public announcement of the acquisition, Wainwright’s stock price nearly doubled and Bray sold all of his shares during the next few months for nearly $300,000 in illicit profits.

O’Neill and Bray were both charged in a parallel criminal case. O’Neill pleaded guilty in the criminal case and settled the SEC’s charges, and a jury found Bray guilty of insider trading. He was sentenced to two years in prison and ordered to forfeit the proceeds of his illegal trading and pay a $1 million criminal fine.

On Feb. 24, 2017, the U.S. Court of Appeals for the First Circuit affirmed the jury’s guilty verdict. Bray failed to self-surrender as ordered, and an arrest warrant was issued. Bray was located and arrested in Puerto Rico on Aug. 11, and he is currently in the custody of the Federal Bureau of Prisons.

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