CHICAGO – The U.S. Attorney has accused the owner of three Chicago financial firms of defrauding his clients out of more than $1.5 million.
Clayton Andrew Cohn, 29, was charge with one count of wire fraud and faces a maximum penalty of 20 years in prison and fines. Cohn managed Marketaction Inc., Marketaction Advisors LLC, and the hedge fund Marketaction Capital Management LLC. The criminal charges come after a civil suit that was brought by the SEC against Cohn in 2013. Cohn was a resident of Winnetka when the SEC took action.
The SEC suit stated that Cohn lost some of his clients’ money on bad investments, but “used the rest of the investors’ proceeds to support his lavish lifestyle – thereby perpetuating the carefully contrived image of a successful trader and investor.”
The SEC suit further stated that Cohn used his status as a Marine Corps veteran to target other veterans. In announcing criminal charges this week, the U.S. Attorney noted the work of the SEC in providing helpful information to the criminal investigation.
A press release from the U.S. Attorney states that between 2010 and 2013 Cohn “told potential investors that his firms were thriving from particular trading strategies, and that it had stakes in numerous private equity investments, when in reality there was very little investment activity…During this time, Cohn made only minimal investments and instead misappropriated a large amount of his clients’ funds for his own personal benefit… Approximately 37 investors sustained losses of more than $1.5 million, according to the information.”
Cohn is scheduled for arraignment May 26.
The U.S. Attorney states that Cohn “falsely represented to investors and prospective clients that redemption of their investments would be ‘simple’ and ‘easy,’ and would be available on a monthly basis. Cohn also deceived investors by distributing account statements that falsely stated the value of investor accounts.”
According to federal officials, “Cohn falsely maintained that Marketaction retained a ‘fund accountant’ to calculate the value of the fund, and an ‘auditor’ to annually inspect it, according to the information. Cohn prepared and filed with the U.S. Securities and Exchange Commission false and misleading reports about his hedge fund, including how it was subject to annual audits.”