Vancouver man charged in Ponzi scheme
Former investment adviser has agreed to settle complaint
Thursday, September 20, 2012
A former investment adviser from Vancouver was among several people charged with perpetrating a long-running Ponzi scheme in the region.
The Securities and Exchange Commission charged Lyman Bruhn with running a scheme that induced investments through false claims he was investing in blue-chip stocks, or public stocks of well-established companies.
The fraud charges were filed Thursday in U.S. District Court in Portland against hedge fund manager Yusaf Jawed; Jawed's attorney, Robert Custis; and Bruhn, an associate of Jawed's.
Bruhn agreed to settle the complaint, without admitting or denying guilt, which allows a judge to make a final judgment in his case. The judgment means Bruhn will forfeit his right to be an investment adviser, commission officials said.
Reached by telephone, Bruhn's Portland attorney, Chris Schatz, said his client was compliant with the commission's ongoing investigation, but declined further comment.
"Mr. Bruhn has cooperated fully with the SEC in reaching a settlement and will continue to cooperate as needed," Schatz said.
The commission said Bruhn's cohort, Jawed, raised more than $37 million from more than 100 investors in the Pacific Northwest and throughout the country, including 20 investors in Washington. He allegedly used false marketing materials that boasted double-digit returns to lure people to invest in his hedge funds, according to a press release from the commission. He then used the money to pay off earlier investors and pay for his personal expenses and travel.
In a complaint filed Thursday in court, the commission alleges that between 2006 and 2008, Bruhn -- who operated Pearl Investment Management LLC and Sasquatch Capital Management LLC in Portland -- raised more than $600,000 from ten investors on the West Coast, including six in Washington, for a hedge fund, the Blue Chip Focus Fund.
"Bruhn unlawfully misappropriated the $600,618 raised for new investors and used that money solely to pay himself and to pay old investors," according to the complaint.
Between 2010 and 2011, the commission alleges, Bruhn told his investors that their investments would soon be redeemed through a third-party purchase of the funds' assets, though there was no such planned purchase.
In addition, Bruhn allegedly sent false marketing materials to investors about the strength of their investments and also sent them falsified quarterly account statements of their investments.
Bruhn's attorney said Bruhn hasn't been an active investment adviser for "quite some time."