SEC Charges Fake Mutual Fund with $2.6M Fraud

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The Securities and Exchange Commission claims that a “fictitious” mutual fund, whose principals are unknown, has defrauded investors out of $2.6 million, according to news reports.

Archer Growth Fund, which operated through 2020, boasted 47% average annual returns through private investments and a 0% expense ratio, FA-IQ sister publication Ignites writes.

The fund used ads bought through Google and Microsoft Advertising to steer web users to articles about it on Medium.com, Yahoo! Finance and Business Insider, the publication writes. The minimum investment was $5,000, and the fund carried a performance fee of 3% and 9%, according to Ignites.

The scam affected at least 20 investors, the publication writes. The scheme lasted until October 2020, when the firm accidentally disclosed the email addresses of more than 300 current and prospective investors in an emailed market commentary document, according to Ignites. Shortly thereafter, the fund’s website was shut down, and later that month, all remaining funds were moved out of the country, the publication writes.

The fund was never registered, nor were any of the entities connected to it, according to the SEC’s complaint, cited by Ignites.

“Investor funds were never used to purchase interests in the Archer Fund but instead were misappropriated by the individuals who orchestrated the scheme for their personal use and to perpetuate the fraud,” the SEC said, according to Ignites. “Indeed, there was no Archer Fund. All remaining investor funds have been transferred to foreign accounts.”

The individuals in question registered businesses in Delaware, Florida and North Carolina and opened online bank accounts using a bogus name and a falsified Lithuanian passport, the SEC said, according to Ignites.

The LinkedIn profiles to which the Archer website linked were also “fictitious,” according to the SEC.

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