Offering fraud actions, long a key staple of the SEC Enforcement Division, the DOJ and others, continue to proliferate despite repeated efforts to alert and educate investors. For example, on November 1, 2019, the SEC and Fordham University School of Law will host a community- based conference on financial fraud. Key topics will include fraudulent schemes that target victims by race, ethnicity, religion, gender, age and other associations (here). Other regulators and law enforcement agencies continually conduct similar programs. Nevertheless, investors continued to be victimized by these frauds at an alarming rate.

One of the more recent cases is U.S. v. Robertson, No. 3:16-cr-133 (E.D. Va. Verdict Oct. 28, 2019). In that case a former football player at the University of Virginia and later in the NFL, Merrill Robertson, Jr., and his friend, Sherman Vaughn, were able to convince investors to entrust them with millions of dollars in investment funds based apparently on little more than football player Robertson’s representations that his firm was qualified to serve as an investment manager and that the funds were safe. Following trial, a jury convicted Mr. Robertson of conspiracy, mail fraud, wire fraud, bank fraud and money laundering.

The scheme traces to as early as 2008. Mr. Robertson and his firms, Cavalier Union Investments LLC and Black Bull Wealth Management LLC, began marketing their investment program. Defendant Robertson identified potential targets from his years as a football player at Fort Union Military Academy, the University of Virginia and in the NFL. Mr. Vaughn worked to raise funds for their claimed investments.

Investors were led to believe that Mr. Robertson was an experienced investment adviser and that his firm was a qualified custodian for retirement funds. Investment funds were supposedly deposited into individual tax-deferred retirement accounts. The investments were secured by tangible cash-producing assets owned by the company, according to the sale pitch.

In fact, the investor funds were not invested. The money was not secured. To the contrary, the money was diverted to the personal use of Mr. Robertson and his co-conspirator, Sherman Vaughn.

Despite having raised over $10 million over an eight-year period, by 2015 Mr. Robertson and his compatriot were out of cash. New capital could not be raised.

Mr. Robertson initiated a new scheme. He turned to raising money by assisting investors in Cavalier and other old friends with loan applications in return for a cut of the proceeds. To facilitate the loans false papers were created and submitted to the lenders. Mr. Robertson and his assistants were able to obtain about $500,000 through this scheme from five financial institutions. Mr. Robertson is scheduled for sentencing on January 3, 2020.