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Advisor, founder of 'Smart Money Academy' charged with $4.7M fraud

New IdentityTheft Scam

A former broker and founder of seminars dubbed the “Smart Money Academy” raised millions from investors and spent it on luxury cars, theater shows and renting a luxury mansion in Hollywood Hills, California, federal prosecutors say.

On Wednesday, authorities charged DaRayl Davis in federal court with defrauding clients of $4.79 million over a 15 year period.

Davis told 22 clients they were guaranteed to receive annual interest payments of at least 6%, and in some cases as much as 14%, if they withdrew money from retirement accounts and invested it with two of Davis’s firms, according to an indictment filed in federal court in Chicago. The SEC entered a default judgment against Davis in March.

Davis, 45, falsely told clients that their investments were protected against losses, that they could withdraw their principal at any time and that some investments were backed by a multinational life insurance company, according to federal prosecutors.

Neither Davis, nor his attorney, Damon Cheronis, responded to a request for comment.

In 2016, one client transferred around $430,000 from a retirement savings account into an account at one of Davis’s firms, the Los Angeles-based Affluent Advisory Group, after he promised guaranteed protection and annual interest payments of 14%, according to court documents. In all, Davis raised $4.79 million from clients, prosecutors say.

Sean Allocca

“Davis misled and concealed from investors the fact that he had not invested their funds as promised by knowingly creating … false and fraudulent investment documents, including fake contracts outlining the purported terms of the non-existent investments and false accounts statements purporting to show account growth from guaranteed interest payments,” according to the indictment.

Davis is a self-proclaimed best-selling author. In addition to being the host of financial seminar series “Smart Money Academy,” Davis hosted a second seminar series dubbed “The Smart Money Millionaire Experience.” He has been featured on Fox Business Network’s Money for Breakfast and Small Biz Today, and NBC’s Today Show’s Money 911, according to his LinkedIn page. A 2014 promotional video on YouTube shows Davis inviting clients to come to a finance seminar that included giveaways such as iPads and a trip to Hawaii.

“In fact, I’m going to even share with you the top two or three investments that are being made by the likes of Bill Gates, Oprah Winfrey, Warren Buffet, Richard Branson and that type of community,” Davis says in the video.

Davis used approximately $476,500 to rent a mansion in Los Angeles, $706,000 on credit card payments, $25,000 in theater tickets, $42,500 on a membership to an exclusive club, $42,000 on luxury hotels, $45,000 on car rentals and $102,000 on airline tickets, court documents show. He also used the funds to make Ponzi-like payments back to investors that he fraudulently represented as interest payments or repayment of capital, prosecutors say.

Davis first registered as an advisor with Investors Capital Corporation in 2005 and moved to Investors Capital in 2006, where he stayed until 2008, per FINRA BrokerCheck records. He did not register with another firm after that, per BrokerCheck.

Prosecutors charged Davis with six counts of money laundering, five counts of wire fraud, four counts of mail fraud and one count of aggravated identity theft. Each count of wire fraud, mail fraud and money laundering carries a prison term of up to 20 years, while aggravated identity theft carries a mandatory consecutive prison term of two years, according to federal prosecutors.

Sean Allocca

Sean Allocca is an associate editor of Financial Planning, On Wall Street and Bank Investment Consultant.



Source: on 2018-06-29 15:52:30

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