SEC Charges James C. Tao with Defrauding Private Equity Fund Investors
According to the Securities and Exchange Commission on December 5, 2017, former financial advisor James C. Tao agreed to settle charges that he defrauded investors in Presidio Venture Capital. According to the complaint, Tao created and managed the private equity fund, and the SEC alleged he made material misstatements in offering documents and misappropriated investor funds.
Tao and his former partner, Donna Boyd (formerly known as Donna Chen), reportedly also settled charges for violating broker-dealer registration requirements by soliciting sales of interests in the funds, which were securities not offered by the brokerage firm with which they were associated at the time.
Presidio Venture Capital – PVC, LLC
According to the SEC’s complaint, while working as financial advisers at Sunbelt Securities in Houston, TX, Tao and Boyd formed private equity fund PVC, LLC (DBA Presidio Venture Capital) in 2013. The primary purpose of the fund was to invest in technology start-ups in the Houston, Texas area, said the SEC’s complaint.
The SEC’s complaint alleges that Tao and Boyd raised approximately $860,000 for the fund between January 2013 and July 2016 by soliciting investments from their advisory clients, some of whom were also brokerage clients, and from other personal and business contacts.
Further, the SEC’s complaint alleges that Tao falsely claimed investor funds would be held in escrow and returned unless $2.5 million was raised. The complaint further alleges Tao failed to timely or adequately disclose that the fund was investing in companies he owned or in which he had a personal stake, which was a clear conflict of interest.
Tao allegedly used investor funds to apply for a loan to increase his interest in the fund, cover other expenses, and make a Ponzi-style payment by using new investor funds to buy out a disgruntled investor.
Tao and Boyd have agreed to settle the SEC’s charges without admitting or denying the allegations. Tao has agreed to injunctions and to pay disgorgement of $155,970.67, interest of $7,965.65, and a penalty of $150,000.00.
Boyd has reportedly agreed to an injunction and to pay a $10,000.00 penalty. The settlement is subject to court approval. Both defendants will be permanently barred from the securities industry.
According to his FINRA BrokerCheck report, Tao was registered with Sunbelt Securities in Houston, TX from August 2012 until he was discharged in March 2016.
Recover your Investment Losses
When brokers make unsuitable investment recommendations and squander client funds, the brokerage firm that employs them may be liable for failure to supervise and responsible for investment losses.
If you were a client of James C. Tao and suffered losses, The White Law Group may be able to help you by filing a FINRA arbitration claim against the brokerage firm that sold you the investment. For a free consultation with a securities attorney call 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
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