Saturday, 1 October 2016
Last updated 8 hours ago
Aug 7 2013 | 10:04am ET
A U.S. Marine veteran bilked his comrades out of nearly $2 million in a hedge fund scam, the Securities and Exchange Commission alleges.
The regulator won an emergency asset freeze against Clayton Cohn, who it accuses of lying to investors in his Marketaction Capital Management and stealing their money to fund a lavish lifestyle. The 26-year-old's alleged victims were fellow military veterans who he recruited through his Veterans Financial Education Network.
Cohn allegedly trumpeted triple-digit annual returns to win $1.78 million from 24 investors. But he allegedly used it to finance an "extravagant" lifestyle, including a mansion in Los Angeles, luxury cars and investments in 3-D adult film productions.
"Cohn's hedge fund investors didn't have a chance to make a profit since he never invested most of their money and promptly lost the portion he did invest," Timothy Warren of the SEC's Chicago office said. The agency said it moved to get the asset freeze after Cohn refused to honor several redemption requests.
The SEC is seeking fines and disgorgement.
For his part, Cohn said through a spokesman that he was "shocked and dismayed" by the SEC's action. "Clayton has been cooperating with the SEC in its investigation and we were hoping to work with the SEC on bringing this matter to a resolution," Howard Rosenburg told Reuters.