U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23692 / November 22, 2016
Securities and Exchange Commission v.Capital Financial Partners, LLC et al., Civil Action No. 15-cv-11447-IT (D. Mass.)
Securities and Exchange Commission v. United States of America v.Will D. Allen and Susan C. Daub, Civil Action No. 15-cr-10181 (D. Mass.)
Defendants in SEC Case Involving Loans to Professional Athletes Plead Guilty to Criminal Charges
On November 14, 2016 and November 21, 2016, William D. Allen and Susan C. Daub pled guilty in federal court to criminal wire fraud and other charges in connection with an investment scheme involving fraudulent loans to professional athletes. The criminal charges arise from the same conduct alleged in a related SEC civil enforcement action.
Allen and Daub both pled guilty to two counts of wire fraud, one count of conspiracy to commit wire fraud, and one count of charging a money transaction in proceeds of a specified unlawful activity. Allen and Daub were arrested on these charges in June 2015. As part of the fraud, Allen and Daub collected funds from investors for certain fictitious or oversubscribed loans and created the false impression that athletes were repaying certain fictitious or oversubscribed loans on schedule by making scheduled monthly payments to investors from new investor funds.
Allen and Daub are currently scheduled to be sentenced in the criminal case in February 2017.
In the SEC's related enforcement action, filed in federal court in April 2015, the SEC's complaint alleges that Allen and Daub, and several corporate entities they owned or controlled - Florida-based Capital Financial Partners Enterprises LLC, and Boston-based Capital Financial Partners LLC and Capital Financial Holdings LLC - operated a Ponzi scheme that raised more than $31 million from investors who were promised profits from loans to professional athletes. The SEC's complaint alleges that Allen, Daub and the defendant corporate entities violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint also named four other entities owned or controlled by Allen, Daub, or both, for the sole purpose of recovering investor funds received as a result of the alleged Ponzi scheme: WJBA Investments LLC, Insurance Depot of America LLC, Simplified Health Solutions LLC, and Simplified Health Solutions 2 LLC.
On April 28, 2015, a federal court in Boston entered a preliminary injunction against Allen, Daub and the defendant corporate entities. The preliminary injunction also froze the assets of all defendants and relief defendants, restrained the defendants from accepting additional investor funds in furtherance of the alleged fraud, and restrained the defendants from destroying or concealing documents related to the alleged fraud.
The SEC's charges against all parties remain pending.