Court Freezes Assets Of Florida Advisor Accused Of Fraud By The SEC

A federal judge froze the assets of a Florida-based investment adviser firm that raised $39 million from at least 30 investors with what the Securities and Exchange Commission is calling a “fraudulent, unregistered securities offering.”

The SEC claims Kinetic Investment Group, and its managing member, Michael Scott Williams preyed on investors located mostly in Florida and Puerto Rico. Williams, 51, of San Juan, Puerto Rico, started the business as Kinetic Management Group in Sarasota, Fla. in 2013.

Defendants solicited investors to invest in Kinetic Funds I, LLC, a purported hedge fund with a sub-fund structure that they managed, the SEC alleged.

“Since at least 2015, Williams has misappropriated at least $6.3 million of Kinetic Funds’ assets to fund other business ventures and to pay for personal expenses,” the SEC complaint claims.

The defendants allegedly represented, among other things, that Kinetic Funds’ largest sub-fund invested solely in U.S.-listed financial products and that at least 90% of its portfolio was hedged using listed options. The SEC alleges, however, that Williams actually invested a significant part of the sub-fund’s assets in a private start-up company owned by Williams.

On March 6, 2020, U.S. District Court Judge William F. Jung granted the SEC’s request for emergency relief, including an asset freeze and an order for records preservation, against Kinetic Group, Williams, and a number of companies charged by the SEC as relief defendants.

The court also granted the SEC’s request to appoint Mark Kornfeld as receiver over Kinetic Group and the relief defendants. The SEC, which continues its investigation, is asking the court to order Williams to turn over his “ill-gotten gains,” with interest, and tack on a civil penatly.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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