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Pennsylvania firm charged in $23M fraud bilking investors
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(April 20, 2009 - Monday) - http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20090420/REG/904209971
Acorn Capital perpetrated Ponzi-like scheme, SEC alleges
By Jamie Burns
April 20, 2009, 3:48 PM EST
The Securities and Exchange Commission has filed charges against a Philadelphia-area investment adviser and his firm, alleging that it misappropriated more than $23 million in client assets.
Donald Anthony Walker Young and his investment adviser firm, Acorn Capital Management LLC, are accused of taking money from investors who purchased interest in Acorn II LP, a limited partnership, to pay other investors “in the nature of a Ponzi scheme,” the SEC said in a statement
The SEC also alleged that he directly stole money from investors to purchase a vacation home in Palm Beach, Fla., and to pay personal expenses related to his horses, boats, limousines and aircraft.
In order to hide his scheme from investors, Mr. Young gave false statements to accountants and investors, the SEC said.
“[Mr.] Young led investors to believe their money was being invested properly when in reality he was spending it unscrupulously,” Robert Khuzami, director of the SEC’s Division of Enforcement, said in a statement.
He refused to turn over client files, account statements, general ledgers and other documents normally produced by financial advisers, the SEC said.
The U.S. District Court for the Eastern District of Pennsylvania issued an order on April 17 granting an emergency order to freeze the assets of Mr. Young and Acorn Capital Management.
The SEC seeks “disgorgement of the defendants’ ill-gotten gains plus pre-judgment interest, financial penalties and permanent injunctions barring future violations of the charged provisions of the federal securities laws.”
Mr. Young, a resident of Coatesville, Pa., is the president, chief investment officer, chief compliance officer, managing member and sole owner of Acorn Capital Management in Kennett Square, Pa.
He also has nearly complete control of Acorn II LP, where he made all the investment decisions and that provides information about deposits and withdrawals to investors.
The complaint also named Mr. Young’s wife, Neely, who allegedly benefited from the schem through her joint holdings of his financial accounts.
Lawyers for Mr. Young declined to comment.
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