Investment Promissory Fraud

From at least November 2016 through October 2019, PIERRE solicited money from investors of Ruless Pierre Consulting Group ("RPCG") by falsely promising them that he would earn a 20 percent return on their initial investment every 60 days through stock trading (hereinafter, the "Promissory Note Fraud").  The investments were memorialized in documents known as "Investment Promissory Notes."  These investment contracts generally promised that the investor would be paid 20 percent interest every 60 days and that the investor could withdraw all funds from the investment with 30 days' notice.  Based on these documents and the false representations of PIERRE, the investors understood that their principal and interest were guaranteed.  

During the course of the investment fraud scheme, PIERRE fraudulently obtained over $2 million from nearly 100 investors.  After receiving money from investors, PIERRE deposited the money into one of his personal bank accounts or bank accounts of RPCG.  PIERRE then transferred the money to trading accounts, where he engaged in unprofitable day trading.  Despite his trading losses, PIERRE repeatedly and falsely represented to investors, including in investment statements containing fictitious balances, that the trading was profitable and that their investments were growing as promised.  In addition to losing their money, PIERRE also used investors' funds to pay for personal expenses, including luxury vehicles.  Additionally, PIERRE further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in Ponzi-like fashion.

The Franchise Investment Fraud

Beginning in or about November 2018, PIERRE began to offer investors, including some individuals who invested in his Promissory Note Fraud, the opportunity to purchase partnership interests in a partnership that would run three fast-food franchise locations (hereinafter, the "Franchise Investment Fraud").   At the time, PIERRE did not own any of the fast-food franchises, but he was in discussions regarding purchasing them.  Each investment was memorialized in a document entitled "Silent Partnership Agreement." 

The Silent Partnership Agreements promised the investors a 5 percent monthly return on the investment, in addition to a 40 percent pro rata share of the quarterly gross operating profit.  The minimum investment was $5,000. 

The Silent Partnership Agreements further provided that RULESS PIERRE was the General Partner, and that he was responsible "for the complete management, control, and policies related to the operation and conduct of the business."

PIERRE received financial statements for the franchise locations, which showed minimal profits.  Nonetheless, PIERRE promised investors an unrealistic 5 percent monthly return on their investment.

In or about April 2019, PIERRE purchased one fast food franchise for approximately $50,000.  PIERRE did not purchase the other franchises.

PIERRE deposited the fast-food franchise investors' money in various bank accounts, which commingled the funds from the Franchise Investment Fraud with the Promissory Note Fraud.  In Ponzi-like fashion, PIERRE fraudulently misappropriated some of the fast-food franchise investors' money to pay back investors in the Promissory Note Fraud.

In total, PIERRE raised at least $200,000 by selling the Silent Partnership Agreements to at least 18 investors.  Some of the investors were paid their 5 percent monthly distribution, but the vast majority of the investors were not made whole.  The fast-food franchise went out of business in December 2019.

The Embezzlement Fraud Scheme

In another scheme, PIERRE embezzled money from his former employers.  From approximately 2007 until February 2016, PIERRE was the director of finance for two different hotels, which were owned by the same company ("Company-1").  One hotel was located in the Palisades, New York ("Hotel-1"), while the other was located in Armonk, New York ("Hotel-2") (collectively, "the Hotels").  As the director of finance, PIERRE was the signatory on several bank accounts held in the name of the management companies that managed the Hotels ("Management Companies"). 

After August 2018, PIERRE no longer worked at either Hotel-1 or Hotel-2, but he regularly wrote himself checks payable to cash from the Management Companies' bank accounts.  Specifically, from September 2018 through March 2019, PIERRE wrote over 70 checks to "cash" or "petty cash" from one of the bank accounts for Hotel-1, for over $300,000.

In addition, from March 2017 through 2019, PIERRE deposited large amounts of cash into his personal bank accounts in amounts that were generally less than $10,000.  The deposits were conducted at various bank locations and typically took place on the same day, consecutive days, or within a short period of time.  For example, in just seven months, from June 2018 through December 2018, PIERRE deposited approximately $225,612, through 138 cash deposits all under $10,000, into a bank account in the name of RPCG.

[S]tuck controlled related business entities, including Signal Lake General Partner LLC, Signal Lake Operations LLC, Signal Lake Management LLC, Signal Lake Side Fund LP, Signal Lake Side Fund II LP, Signal Lake Side Fund IIA LP, Signal Lake Top Prospects Fund, and SLT Logic LLC (collectively, the "Signal Lake entities").  The Signal Lake entities were venture capital vehicles investing in various technology companies.  Stuck solicited investments for the Signal Lake entities.

In 2015 and 2016, Stuck committed fraud by, among other things, misrepresenting the financial health and prospects of the Signal Lake entities and their investments in order to enrich himself.  In one instance, Stuck made misrepresentations to an undercover FBI agent posing as a prospective investor.  Stuck falsely guaranteed a payment of twice the original $500,000 investment, and falsely claimed that a Signal Lake entity had $200 million in a particular bank account when, in fact, the balance of the bank account at the time was $.50.  He also falsely stated that a $50,000 fee he required would be used for accounting and legal expenses.  When the undercover agent paid Stuck the $50,000 fee, Stuck used it for personal expenditures.

Stuck also made false statements in forms that he filed with the Securities and Exchange Commission in 2016 and 2017.  Specifically, Stuck falsely claimed that a Signal Lake entity managed and had a gross asset value of $145 million, and was subject to annual audits by a Stamford accounting firm.

[LJM] adopted a short volatility trading strategy that carried risks that were remote but extreme. The complaint alleges that, in order to ease investor concerns about the potential for losses, LJM, Caine and Parvataneni made a series of misstatements to investors and the mutual fund's board about LJM's risk management practices, including false statements about its use of historical event stress testing and its commitment to maintaining a consistent risk profile instead of prioritizing returns. The complaint further alleges that, beginning in late 2017, during a period of historically low volatility, LJM, Caine, and Parvataneni increased the level of risk in the portfolios in order to chase return targets, while falsely assuring investors that the portfolios' risk profiles remained stable. According to the complaint, in February 2018, the markets suffered a large spike in volatility, resulting in catastrophic trading losses exceeding $1 billion, or more than 80% of the value of the funds LJM managed, over two trading days.