SEC charges unregistered broker with scamming investors out of $2.2 million

abdelaziz Fathi

The Securities and Exchange Commission today charged a Michigan-based man with defrauding investors, arguing that he acted as un unregistered broker while raising funds he never invested, opting instead to use them for other expenses.

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In a complaint filed in the U.S. District Court for the Western District of Michigan, the SEC alleges that Joshua L. Rupp engaged in a fraudulent investment scheme that netted nearly $2.2 million from about 20 investors.

Throughout 2018 and 2019, the defendant touted to people who lacked investment experience lucrative trading returns and provided them with fabricated account statements that misrepresented his profitability.

To cover up his fraud, Rupp misrepresented that he was a licensed securities professional, and that he would generate profits by trading on behalf of pool participants. In connection with the promotion of his pool, he assured victims that their principal was protected from losses. Another claim was made that fund participants could get extraordinary investment returns as the pool was generating as much as 115 percent increase in value.

But these and other claims in the document were misleading, according to the SEC’s compliant.

As also alleged, ‎the defendant provided investors fake documents purporting to show he was associated with a licensed broker-dealer while, in reality, he never registered with the SEC or operated with a registered entity.

The statement further states that Rupp attempted to evade regulatory actions from certain states by changing the business name in order to mask his actual identity.

“As alleged in the complaint, Rupp solicited Main Street investors and depleted their retirement savings by using fake credentials and false documents showing extremely high returns. Investors can check an investment professional’s qualifications through our Investor.gov website,” said Jennifer S. Leete, Associate Director of the SEC Enforcement Division.

While the document claimed investors would be provided a safe harbor for their funds, the SEC argued the defendant mishandled the raised money and investors lost most of their capital.

As a result of the actions and misappropriation, the ‎SEC seeks full restitution to ‎victims, disgorgement of any ill-gotten gains, a civil ‎monetary ‎penalty, permanent registration and trading ‎bans, and a permanent injunction ‎against violations of ‎federal laws, as charged.‎

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