CHICAGO (CN) – The SEC says the president of Hubadex skimmed $3.6 million from the $16.9 million he raised from investors. The agency claims that 60-year-old William Huber falsified financial statements, overstated his funds’ assets by more than $37 million, and spent investors’ money on himself.
Hubadex, based in Forsyth, Ill., sold limited partnerships in two pooled investment funds – the Quarter Fund and the Symmetry Fund – and participation agreements in a “purported” investment club called the Trimester Fund, according to the federal complaint. The SEC says Huber began by “solicit(ing) friends and acquaintances,” and got new investors from referrals.
Hubadex claimed to manage $40 million in funds, though it only managed $3 million, the SEC says. It adds that Huber took inflated “incentive” fees based on the falsified assets. And the SEC says that though the funds lost money this year, Huber has taken $657,658 in fees.
The SEC says Huber sent clients falsified statements that showed the funds were performing well, though they were losing money. And it claims that Huber made “Ponzi-like” payments, paying off old investors with new money.
It claims Huber lied to the SEC about Symmetry’s assets during an investigation.
The agency says Huber sent $1.2 million of investors’ money to a joint bank account he held with his wife Ruthann, and sent $788,000 to her personal account. And, the SEC says, Huber spent $1.7 million on property and life insurance premiums.
The SEC says that in 2005 Hubadex was fined $50,000 by the Illinois Secretary of State Securities Department for registration violations and that it was forced to “make an offer of rescission to certain investors” on the three funds.
The suit names the three funds and Huber’s wife as relief defendants.
The SEC seeks disgorgement and civil penalties.