Yesterday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit in the District of Minnesota against Jason Beckman, his wife Hollie Beckman, and Oxford Private Client Group, LLC (Oxford PCG). According to the Complaint in the lawsuit, Beckman played a significant role in the fraud perpetrated against investors by Trevor Cook and his associates. In fact, Beckman raised almost 25% of the funds invested with Cook, $47.3 of the $194 million in victim funds. The SEC alleges that “from September 2006 to April 2009, the Beckmans received approximately $7.8 million from accounts containing the investors’ funds. They used the funds to pay for million-dollar homes, luxury cars, foreign travel, country-club expenses, a suite at professional hockey games, and other trappings of a high-end lifestyle.”

The Complaint goes on to detail the extent of the fraud. At first, Beckman instructed investors to send their investment funds to a company called UBS Diversified. Later checks were made payable to Oxford Global Advisors. Beginning in the middle of 2008, Beckman began directing investors to transfer their funds to Crown Forex, S.A. Investors were told to make their checks payable to “Crown” or “Crown Forex,” but these funds were not sent to Crown Forex S.A. in Switzerland. The checks were instead deposited in a Minnesota bank account held by a US company called “Crown Forex, LLC.” Crown Forex, LLC was never registered to do business in the United States, and its only asset was this Minnesota bank account in which investor funds were deposited. Of the funds collected by Beckman, only about $23 million was ever sent to Switzerland, and about $3 million of that money was used for an equity investment in Crown Forex S.A.

As part of its Complaint, the SEC is seeking a judgment against Beckman and Oxford PCG for violation of:

• Section 5 of the Securities Act of 1933 – which makes it a violation to sell, or offer to sell, unregistered securities
• Section 17(a) of the Securities Act – which makes it a violation to commit fraud in the sale or offer of securities
• Section 10(b) of the Exchange Act of 1934 and Exchange Act rule 10b-5 – which make it a violation to use manipulative or deceptive practices in connection with the purchase or sale of securities
• Section 206(1) of the Investment Advisers Act of 1940 – which makes it a violation for any investment adviser to defraud a client

The SEC is also seeking to recover $7.8 million transferred to Beckman’s wife from accounts containing investor funds.

For these violations, the SEC is asking the Court to

1. Issue an injunction preventing Beckman and Oxford PCG from engaging in further conduct that violates the Securities, Exchange, or Advisers Acts;
2. Order Beckman, his wife, and Oxford PCG to return any ill-gotten gains they received as a result of their illegal conduct; and
3. Impose civil penalties against Beckman and Oxford PCG for their conduct.