SEC Says Firm Violated Consent Order

     CHICAGO (CN) – The SEC says Enterprise Trust Company President John Lohmeier used fraud to convince hundreds of customers of Advisory Financial Services to transfer $49 million to Enterprise, where Lohmeier traded on margin, made short sales and used the money as collateral for their own benefit.




     The SEC says he also sold more than $8 million without customers’ knowledge or consent to cover Enterprise’s margin debt.
     Operating out of their Oak Brook office, Lohmeier, 43, of Oak Brook, and Vice President Rebecca Townsend, 46, of Downers Grove, also defrauded two other brokerage firms where Enterprise had margin accounts, the SEC says.
“When these firms questioned Defendants about who actually owned the securities in the account and/or whether the actual owners of the securities had authorized the use of margin in connection with their securities, Defendants falsely represented that the AFC customers knew about and approved of the use of their assets as collateral for the margin trading in these margin accounts,” the SEC says in its federal complaint.
Before forming Enterprise as a Nevada-chartered trust in 2005, Lohmeier managed the trust department at Hinsbrook Bank & Trust in Oak Brook, where Townsend worked as a trust administrator, the SEC says. It claims they resigned from Hinsbrook in 2006 and took some customers with them.
In January 2006, the Illinois Department of Financial and Professional Regulation prohibited Enterprise from using the word “trust” in its name without authorization from the DFPR, and prohibited all three defendants “from conducting any activity as corporate fiduciaries in Illinois or holding themselves out as available to act as fiduciaries in Illinois without authorization from the DFPR. … After the Consent Order, Enterprise, Lohmeier and Townsend continued to operate as Enterprise Trust Company out of Enterprise’s Oak Brook, Illinois, office,” the complaint states.
It adds, “In 2006, Enterprise suffered a net loss of $358,620.79.”

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