Showing posts with label START-UP PRIVATE EQUITY FUND. Show all posts
Showing posts with label START-UP PRIVATE EQUITY FUND. Show all posts

Saturday, February 8, 2014

DEFENDANTS IN PENSION FUND FRAUD CASE TO PAY $9.5 MILLION JUDGEMENT

FROM:  SECURITIES AND EXCHANGE COMMISSION 
SEC Obtains $9.5 Million Money Judgment Against Onyx Capital Advisors, LLC, Roy Dixon, Jr. and Michael A. Farr

The Securities and Exchange Commission announced that on January 31, 2014, the Honorable Denise Page Hood of the United States District Court for the Eastern District of Michigan entered a final judgment against Defendants Onyx Capital Advisors, LLC, Roy Dixon, Jr. and Michael A. Farr. The final judgment orders the Defendants to pay over $5.4 million in disgorgement and more than $4.1 million in civil penalties.

In its Complaint, the Commission alleged that Detroit-based Onyx Capital Advisors and its founder, Dixon, raised approximately $23.8 million from three public pension funds for a start-up private equity fund and then illegally withdrew money invested by the pension funds to cover personal and other business expenses. The Complaint further alleged that Dixon's friend, Farr, assisted Dixon in the scheme. Specifically, the Commission alleged that Dixon and Onyx Capital misappropriated money from the pension funds' investments under the guise of management fees and illegally obtained additional funds by diverting money from purported investments into used car companies controlled by Farr.

The Court's final judgment, along with its order setting monetary sanctions, followed its earlier decisions to grant the Commission's motion for summary judgment against Onyx Capital Advisors and Dixon and to enter a consent judgment against Farr. The Court found that Dixon and Onyx Capital Advisors took more than $2.06 million is excess management fees and misappropriated nearly $1.05 million through Farr and his companies. The Court also found that Farr illegally received approximately $2.3 million that Onyx Capital Advisors ostensibly invested in his companies.

The Court imposed the following relief against Dixon and Onyx Capital Advisors: 1) permanent injunctions prohibiting future violations of Section 17(a) of the Securities Exchange Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder; 2) an order requiring them to jointly disgorge more than $3.1 million plus prejudgment interest; and 3) an order requiring them to jointly pay a civil penalty of more than $3.1 million. The Court further ordered Farr to disgorge more than $2.3 million plus prejudgment interest and to pay a civil penalty of $1 million. The Court previously had entered a permanent injunction, by consent, against Farr prohibiting him from aiding and abetting future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.

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