A South Florida man has been accused by the Securities and Exchange Commission of operating a $17 million Ponzi scheme through his investment advisory firm. Frederic Elm, along with his advisory firm Elm Tree Investment Advisors LLC ("ETIA"), was named in a complaint filed by the Commission last Friday that alleged violations of federal securities laws. Elm's wife, Amanda Elm f/k/a Amanda Elmaleh, was also named as a Relief Defendant based on the Commission's belief that she wrongfully received investor funds. The Commission obtained an asset freeze from a Florida federal court, and is seeking injunctive relief, disgorgement of ill-gotten gains, civil monetary penalties, and prejudgment interest. Additionally, the Court appointed Grisel Alonso as Receiver over ETIA and the funds purportedly managed by ETIA.
Elm, 45, resides in Fort Lauderdale, where he operated ETIA. ETAI purportedly acted as fund manager for three funds: the Investment Fund, The 'e'Conomy Fund, and The Motion Opportunity Fund (collectively, the "Funds"). Beginning no later than November 2013, Elm and ETIA solicited investors both through phone and email based on promises that their funds would be invested based on various equity and options trading strategies and that they could expect guaranteed annual returns ranging from 2% to 11%. Most investors purchased interests in limited partnerships through subscription agreements, while some investors received promissory notes evidencing their investment. In just over one year, Elm and ETIA raised at least $17 million from over 50 investors.
Elm used roughly $7 million of investor funds for trading. However, he did not achieve the returns he promised to investors; rather, his trading account suffered losses of nearly $4 million from January 2014 to November 2014. Of the remaining funds, Elm used over $5 million to make Ponzi-like payments to investors purportedly representing interest and returns of principal. Elm also used investor funds to support a lavish lifestyle that included the purchase of a $1.75 million home, nearly $300,000 in luxury cars, over $130,000 in jewelry, and even nearly $20,000 to pay his wife's student loans.
Grisel Alonso has been appointed as Receiver over ETAI and the Funds, and has established a website at www.elmtreereceivership.com. A court hearing has been scheduled for January 29, 2015 at 1:15 PM in Courtroom 205B of the Federal Courthouse in Ft. Lauderdale, FL. A copy of the Commission's Complaint is below: