SEC charged Advisor, Deeproot Funds and Policy Services Inc. With Defrauding 300 Investors
According to The Securities and Exchange Commission on Friday, the regulator reportedly charged a San Antonio investment advisor and Deeproot Funds LLC, along with Policy Services Inc., with defrauding nearly 300 investors out of $58 million.
The individual and Deeproot allegedly persuaded investors, many of whom were retirees, to cash out annuities and individual retirement accounts they held with other investment companies and invest in two Deeproot funds, according to the SEC’s complaint.
The advisor reportedly told investors that the two funds Deeproot 575 Fund, LLC and the Deeproot Growth Runs Deep Fund, LLC, would invest in life insurance policies and related businesses to provide “relatively safe returns to investors,” according to the complaint.
Between September 2015 to at least February 2021, the individual and Deeproot allegedly defrauded the two investment funds and nearly 300 people who invested roughly $58 million in the funds, according to the SEC.
The individual purportedly paid himself roughly $1.6 million from 2016 through 2020 using investors’ funds allegedly “to pay hundreds of personal expenses, including his daughter’s private school tuition, vacations with his family, his second wedding, his second divorce, his third wedding, jewelry for both his second and third wives (including engagement rings and wedding bands for both wives), other lifestyle spending for and by his family, and to buy a condominium in Kauai, Hawaii,” the SEC said in its statement.
The SEC alleges that the Defendants raised more than $58 million from investors in the 575 Fund and the Deeproot Growth Runs Deep Fund, yet they “spent less than $10 million to purchase life insurance policies for the Funds.”
Further, the defendants allegedly purchased no new insurance policies for the Funds after September 2017, despite raising approximately $43 million for the Funds after that time.
Recovery of Financial Losses
The White Law Group is investigating the liability that sales agent may have for selling Deeproot funds to investors.
Broker dealers that sell alternative investments are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of Deeproot funds, please contact The White Law Group at 1-888-637-5510 for a free consultation.
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. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.
For more information on the firm’s investigation please see Deeproot Growth Runs Deep Fund LLC Securities Investigation.