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Ex-Advisor Fined Over Lying to Investors

By Alex Padalka September 19, 2018

The SEC has charged a former investment advisor and owner of an investment education franchise for running a multimillion-dollar fraud, according to a press release published by the regulator.

Thomas Caufield allegedly raised over $6 million from more than 40 investors for high-yield promissory notes he said would generate healthy returns tied to what he claimed was a profitable franchise, the SEC says. But the former advisor allegedly misled the investors about the “bleak” financial situation of the business, made false claims about the notes being secured by assets and used investor funds to repay earlier investors, according to the SEC’s complaint filed in the federal district court for the Northern District of Texas.

Caufield allegedly used false pitches and offering materials to attract the investors, who included students of the franchise itself as well as clients of DAT Capital Advisors, a former investment advice firm he wholly owned and operated, the regulator says.

The former advisor consented to a final judgment permanently enjoining him from future violations and from engaging in the sale, purchase and offer of securities, without admitting or denying the SEC’s allegations.

Caufield also agreed to pay a disgorgement of $614,815 plus prejudgment interest of $126,032, deemed satisfied by proceeds certain investors were repaid with following the 2018 sale of the franchise, as well as a $160,000 civil penalty, according to the regulator.

(Getty)

Caufield became registered as investment advisor representative in 2008, spending four months with Wachovia Securities before moving on to DAT, with which he remained registered until Oct. 30, 2015, according to the SEC. He has no other disclosures on his SEC record.