Securities Industry Commentator by Bill Singer Esq

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From May 2015 to October 2018, Wilson defrauded four women with whom he had engaged in romantic relationships, including actress Jenifer Lewis, whose credits include the television series "Black-ish." Wilson met Ms. Lewis at a gym where he worked as a manager, and he met his other victims through location-based dating applications such as Bumble.

Wilson convinced his victims to begin dating him by telling them lies that were designed to create a false sense of prestige. For example, Wilson falsely told his victims that he was a Navy SEAL, a graduate of Oxford University, and an Oxford professor who was teaching courses at UCLA on biblical antiquities.

Relying on the intimacy he created with his victims, Wilson convinced them to invest their money in one of his sham companies - Ultimate FX, which he claimed was a sound design business, and 2nd Life, a purported software business designed to provide animated instruction on applying for government benefits.

"It is the emotional impact that this crime had on his victims that makes it particularly egregious," prosecutors wrote in a sentencing memorandum. "[Wilson] not only conned people out of their money, but he also did so by betraying their trust after forging intimate relationships with them. The impact of such a fraud is more than financial; it is personal."

Wilson deceived his victims into investing in these companies by making false statements, such as claiming that the ABC television network and EA Sports video game developer had used Ultimate FX for their shows and games. Wilson also lied that investors - real people whose identities he used without authorization - had valued 2nd Life at more than $30 million and wanted to invest in the company. Wilson also falsely stated that 2nd Life had a present valuation of $3.2 million.

In actuality, Wilson used his victims' money to fund his own lifestyle and pay his own personal expenses, concealing the fact that he - using the alias "Brice Carrington" - had previously pleaded guilty in federal court in Oakland to carrying out a very similar scheme to defraud Ultimate FX investors. Wilson served a four-year term in federal prison after pleading guilty in 2009 to wire fraud and tax evasion charges.

Wilson also sold unregistered 2nd Life securities by distributing "shareholder agreements" and "stock purchase agreements" to the victims. After accepting his victims' funds, Wilson used the money to pay off his credit card debt, pay his rent and buy luxury items.

Through this scheme, the actual loss to Wilson's victims was $272,000.

Heckler managed, controlled or was involved with multiple investment funds, including Conestoga Partner Holdings (Conestoga), Cassatt Short Term Trading Fund LP (Cassatt), CV Special Opportunity Fund LP (CVSO), and TA1 LLC (TA1). 

From 2014 to 2018, Heckler misrepresented to investors that he would invest their funds in particular trading strategies. Instead, he diverted their funds out of Cassatt and TA1 for purposes inconsistent with the trading strategies, including to pay out millions of dollars to other investors. Heckler also used investors' funds to cover investment losses suffered by other funds under his management and/or control.

Heckler solicited investments from Victim-1, claiming the investments would be invested in Cassatt, which employed a "first loss" trading strategy intended to protect investors from losses. However, as of December 2013, Cassatt no longer had a brokerage account that was necessary to employ the represented trading strategy. Despite Cassatt no longer having a brokerage account, in 2014, Heckler represented to Victim-1 that Cassatt was still engaged in a first loss trading strategy and solicited Victim-1's investment in Cassatt. In September 2014, Victim-1 invested approximately $9.1 million in Cassatt, relying on Heckler's representation that Victim-1's money would be invested consistent with Cassatt's first loss trading strategy.  Heckler used $4.6 million of Victim-1's investment to repay existing investors and the remainder to satisfy other obligations Heckler owed that were unrelated to Cassatt.

Heckler also approached Victim-2 about the possibility of creating a hedge fund that would deploy capital to first-loss traders, who would serve as the "first loss" protection for investors' capital. In late 2015, Victim-2 formed a hedge fund, utilizing the concept proposed by Heckler (Entity-1). In 2015 and 2016, Entity-1 invested $10.1 million in TA1 via a participation agreement that provided that Entity-1's investment would be used for an "options arbitrage dividend recapture trade," otherwise known as the "skate trade." In fact, none of Entity-1's investment was used for the "skate trade."  Entity-1's investment was used for other purposes, including repaying others who had previously invested with Heckler.

Over the course of the scheme, Heckler sent out statements to investors that misled them into believing the value of their investments was increasing, when, in fact, the value was declining. Heckler took approximately $1 million in fees and distributions from the fraudulently obtained investments for his personal use. 

According to the SEC's complaint, Heckler, after forming Cassatt and CV Special, transferred Conestoga's poorly performing assets to those funds and then misrepresented the funds' objectives and performance to Cassatt and CV Special investors. The complaint alleges that, between 2009 and 2019, Heckler falsely told investors that their funds were being used to engage in very short-term equity trading and that the investments were consistently generating positive returns. In truth, according to the complaint, a substantial amount of investors' funds had not been invested at all or had been used to make Ponzi-like payments to prior investors. According to the complaint, Heckler raised at least $90 million in new investor capital through Cassatt, CV Special, and three other entities he controlled, of which over $32 million was used to repay or redeem prior investors. In addition, the Commission alleges that Heckler took over $1 million for his personal use, and Cassatt and CV Special suffered significant losses as a result of poor investments by Heckler. Heckler also allegedly concealed these losses from investors by providing them with false account statements showing fictitious gains.

reported concerns internally to Claimant's employer. Claimant provided information that caused Enforcement staff to open an investigation, including multiple written submissions detailing Claimant's tips and identifying potential witnesses to Enforcement staff. Claimant also provided assistance through ongoing discussions with Enforcement staff by meeting multiple times to explain Claimant's information. 

• Securities Industry Commentator
• Bill Singer