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March 11, 2020 at 11:42 AM
The Securities and Exchange Commission obtained an asset freeze and other emergency relief against Sarasota, Florida-based investment advisor Kinetic Investment Group LLC and its managing member, Michael Scott Williams, who the SEC said Tuesday raised about $39 million as part of a fraudulent, unregistered securities offering.
The SEC filed a complaint Feb. 20 in U.S. District Court, Middle District of Florida.
According to the complaint, Kinetic Group and Williams fraudulently raised millions of dollars by making material misrepresentations to investors who they solicited to invest in Kinetic Funds I LLC, a purported hedge fund that they managed.
Kinetic did not immediately return a phone call for comment Wednesday and an email message to the address listed on its website apparently was not delivered. ThinkAdvisor received a reply saying the address was either not found or “unable to receive mail.”
At least 30 investors located mostly in Florida and Puerto Rico were victimized by the scam, the SEC said, noting the defendants allegedly represented, among other things, that Kinetic Funds’ largest sub-fund invested entirely in U.S.-listed financial products and that at least 90% of its portfolio was hedged using listed options.
The SEC alleged, however, that Williams actually invested a significant part of the sub-fund’s assets in a private startup company owned by William instead. The complaint further claimed Williams misappropriated at least $6.3 million via undisclosed loans to himself and his entities.
