U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23768 / March 3, 2017
Securities and Exchange Commission v. Capital Financial Partners, LLC et al., No. 15-cv-11447-IT (D. Mass. filed Apr. 7, 2015)
United States of America v. Will D. Allen and Susan C. Daub, No. 15-cr-10181 (D. Mass. filed June 15, 2015)
Defendants in SEC Case Involving Loans to Professional Athletes Sentenced Criminally
On March 1, 2017, William D. Allen and Susan C. Daub, both defendants in a parallel SEC enforcement action, were each sentenced to six years imprisonment and ordered to pay $16.8 million in restitution for their role in an investment scheme involving fraudulent loans to professional athletes.
Allen and Daub were arrested in June 2015 on criminal charges of conspiracy, wire fraud, and charging a money transaction in connection with specified unlawful activity. The criminal complaint against Allen and Daub alleged that they collected funds from investors for certain fictitious or oversubscribed loans to professional athletes 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. They pled guilty to the criminal charges in November 2016.
In the SEC’s parallel enforcement action, filed in federal court in April 2015, the SEC’s complaint alleges that Allen and Daub, and three 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 almost $32 million from investors who were promised profits from loans to professional athletes. The SEC’s complaint charges Allen, Daub and the three corporate entities with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC’s complaint also named WJBA Investments LLC, Insurance Depot of America LLC, Simplified Health Solutions LLC, and Simplified Health Solutions 2 LLC. – entities owned or controlled by Allen, Daub, or both – as relief defendants for the sole purpose of recovering investor funds received as a result of the alleged Ponzi scheme.
On April 28, 2015, the SEC obtained a preliminary injunction that continued an asset freeze against Allen, Daub, the defendant corporate entities, and relief defendants, restrained the defendants from accepting additional investor funds, and prevented the defendants from destroying or concealing documents related to the alleged Ponzi scheme.
The SEC’s litigation against Allen, Daub, and the corporate defendants and relief defendants is continuing. The SEC seeks permanent injunctions, disgorgement and prejudgment interest, and civil penalties.