Securities and Exchange Commission Charges Tallahassee-based Firm with Fraud

Securities and Exchange  Commission Charges Tallahassee-based Firm with Fraud

The US Securities and Exchange Commission (SEC) released a statement today detailing fraud charges against a Tallahassee-based investment firm. The SEC’s complaint was filed in federal district court in the Northern District of Florida.

The SEC charged Cambridge Capital Group Advisors and two principals, Tim Howard and Don Reinhard, with defrauding former NFL players involved with a class-action lawsuit claiming they suffered brain injuries as a result of concussions.

Based on SEC documents, Cambridge is an investment adviser firm reporting to the SEC since July 2015. Howard formed Cambridge in March 2015, and its principal place of business was at all times in Tallahassee, Florida.

According to the SEC’s complaint, the defendants advertised that funds would be invested in a variety of instruments, but unbeknownst to investors, the funds were almost exclusively invested in settlement advance loans to more than 70 of Howard’s NFL class-action clients.

Additionally, the SEC contends the defendants misappropriated a total of more than 20 percent of investor funds, or about $973,000, to pay themselves fees and to cover costs associated with Howard’s personal residential mortgages.

“Instead of investing all of the funds’ assets as promised, Howard and Reinhard used a significant portion of investor money to line their own pockets,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The full SEC press release is listed below and the formal complaint can be viewed here.

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SEC Charges Adviser Firm and Its Principals With Defrauding Retired NFL Players
 
FOR IMMEDIATE RELEASE Washington D.C., Aug. 29, 2019

The Securities and Exchange Commission today charged a Tallahassee-based investment adviser firm and its two former principals with defrauding investors, most of whom were retired NFL players who had joined a class-action lawsuit against the league claiming they suffered brain injuries as a result of concussions.

The SEC charged Cambridge Capital Group Advisors, LLC (f/k/a Cambridge Capital Advisors, LLC); Cambridge’s president Phillip Timothy Howard, a Florida attorney who represented the retired players in the class action lawsuit; and Don Warner Reinhard, a former registered investment adviser previously barred by the SEC, with defrauding 20 investors in two proprietary hedge funds operating out of Howard’s law offices.  According to the SEC’s complaint, the defendants advertised that the funds would invest in a variety of instruments, but unbeknownst to investors, in fact invested almost exclusively in settlement advance loans to more than 70 of Howard’s NFL class-action clients.

As alleged, the defendants represented that Reinhard was an “extremely successful investment manager,” but failed to mention that he had served jail time for bankruptcy and tax fraud, and had been barred by the SEC from working for any investment adviser firm.  The SEC further alleges that Howard defrauded investors by borrowing $612,000 in undisclosed personal mortgage loans from the funds, which he never repaid, and that Howard and Reinhard used investor funds to pay themselves fabricated “broker fees” on settlement advance loans to Howard’s legal clients.  Howard and Reinhard allegedly raised $4 million from the retired NFL players, about half of whom rolled over their NFL 401(k) accounts to the hedge funds.

“We allege that Cambridge, Howard and Reinhard defrauded these particularly vulnerable investors, many of whom invested their retirement savings,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.  “Instead of investing all of the funds’ assets as promised, Howard and Reinhard used a significant portion of investor money to line their own pockets.”

The SEC’s complaint filed in federal district court in the Northern District of Florida charges Howard, Reinhard, and Cambridge with violating the anti-fraud provisions of the federal securities laws, and seeks permanent injunctions, disgorgement of allegedly ill-gotten gains, prejudgment interest, and financial penalties.

The SEC’s investigation was conducted by David P. Staubitz and Mark Dee, under the supervision of Chedly C. Dumornay and Glenn S. Gordon of the SEC’s Miami Regional Office.  The litigation will be led by Amie R. Berlin, under the supervision of Andrew O. Schiff.

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2 Responses to "Securities and Exchange Commission Charges Tallahassee-based Firm with Fraud"

  1. Avatar
    Peggy   August 29, 2019 at 7:12 pm

    Wait a minute! Wasn’t Reinhard charged with something similar several years ago? How was he allowed another crack at innocent investors?

    Reply

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