Former COO Fraudulently Caused Advisory Firm to Overbill Clients
The SEC filed on March 28, 2019 charges against the former Chief Operating Officer (COO), Richard Diver of a Commission-registered investment adviser for aiding and abetting the advisory firm’s actions to overbill its clients as part of a fraudulent scheme to improperly inflate his own pay.
According to the SEC’s complaint, between 2011 and December 2018, former COO Richard Diver, a resident of Spring Lake, New Jersey, engaged in an illicit scheme to steal approximately $6 million from his employer. Richard Diver, whose duties included managing the advisory firm’s payroll and client billing functions, allegedly inflated his salary by hundreds of thousands of dollars per year. As part of this scheme, Richard Diver defrauded investors by causing the investment adviser to overbill more than 300 investment advisory client accounts by approximately $750,000, for the purpose of generating additional revenue. As alleged in the complaint, Richard Diver used this revenue to finance his inflated salary and when confronted by the investment adviser’s CEO in December 2018, Richard Diver confessed to having carried out the scheme.
The SEC’s complaint, filed in federal district court in Manhattan, charges Richard Diver with aiding and abetting the investment adviser’s violations of the antifraud provisions in Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking a judgment ordering permanent injunctive relief, disgorgement plus prejudgment interest thereon and civil monetary penalties against Diver.
Separately, the United States Attorney’s Office for the Southern District of New York announced criminal charges against him.
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