Securities lawyers at the Massachusetts Office of the Securities & Exchange Commission have filed a Complaint against Gregg D. Caplitz and Insight Onsite Strategic Management, LLC, alleging, among other things, that the defendants engaged in securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. According to a summary in the complaint:
This case involves an investment adviser’s theft of assets from his clients and others. On information and belief, the scheme described herein may have raised approximately $1,100,000 from at least twelve of Caplitz and IOSM’s advisory clients and others. Caplitz and IOSM employed a fraudulent scheme, and made and used false and misleading statements, in connection with the offer and sale of shares in a purported hedge fund named the Insight Onsite Strategic Fund, LP, (the “Insight Onsite Fund”) and/or the offer and sale of membership interests in Insight Onsite Strategic Partners, LLC (“Insight Onsite Partners”), which was purportedly to serve as the general partner of the Insight Onsite Fund. Caplitz and IOSM schemed to defraud investors by promising them that they would be invested in either the Insight Onsite Fund or that they would be investors in Insight Onsite Partners, which would earn management fees from managing and operating the Insight Onsite Fund. Many of the investors that Caplitz and IOSM targeted when soliciting these investments were already advisory clients of Caplitz and IOSM. Once an investor agreed to invest in the Insight Onsite Fund or Insight Onsite Partners, Caplitz directed them to send money to a bank account in the name of IOSM, or to an account in the name of another entity, The Knew Finance Experts (“Knew Finance”). Caplitz had represented to several investors that Knew Finance would also be involved in managing the Insight Onsite Fund.
In order to make their purported investments in the Insight Onsite Fund and/or Insight Onsite Partners, certain of the investors authorized Caplitz and/or IOSM to liquidate securities they held in their individual retirement accounts. Instead of using the investors’ funds to purchase shares in a hedge fund, or using their funds for legitimate purposes to manage or develop a hedge fund, Caplitz and/or IOSM transferred control over the investors’ funds to the Relief Defendants, who used the funds largely for their own personal expenses. Caplitz also obtained funds from a real estate investment trust by falsely representing that a hedge fund he operated was interested in making an investment in that trust.
SEC v. Gregg D. Caplitz and Insight Onsite Strategic Management, LLC, 13-cv-10612-MLW (District of Massachusetts). See the complaint here.