According to the SEC, Thomas Conrad Jr.–an 85 year old man from Alpharetta, Georgia who was barred from the securities industry 45 years ago for fraud–was defrauding investors all over again with the assistance of his 55 year old son, Stuart P. Conrad. The two allegedly defrauded investors in a group of hedge funds they managed that held $10.7 million.
According to the SEC’s complaint, Conrad ceased payouts to investors for over four years beginning in 2008. He, however, allegedly continued to pay out cash to himself, his son, other relatives, and a few favored investors from the investment fund.
Thomas Conrad Jr.’s funds previously ran afoul when one substantial investment was found to be a Ponzi scheme run by another money manager, according to the agency. The fund had to repay $2.3 million of alleged “false profits” that the fund had received from the scheme. At the same time numerous investors were fighting for their money, Conrad paid himself and his wife about $2 million is redemptions and other payments, including their yearly salaries amounting to $252,000 as well as $124,000 for down payments on an aircraft. According to the SEC, his son received an estimated $444,000 in redemptions and another son, in the capacity of fund administrator, wrote himself a $26,500 check from one of the funds to purchase a truck. He eventually repaid the money but never disclosed the transaction to investors. Additionally, a daughter-in-law received an $18,000 loan from one fund to cover credit card bills. The loan was later bought by another fund run by Conrad, and this too was never disclosed.
The SEC claims that Conrad violated federal securities laws by failing to disclose to investors that he had been barred from the investment industry following a 1971 disciplinary action. It alleges that Conrad also acted wrongfully by having the hedge fund pay extra fees to himself as a sub-manager of some of the investments without disclosing the conflict of interest.
Conrad’s son, Stuart Conrad, “aided and abetted these violations,” said the SEC. The agency asked the court to impose civil penalties and to require the Conrads to repay money taken from investors.If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.