This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
A southern Utah resident allegedly placed investor monies mostly into funds that paid him or his company a kickback — even when those investments lost tens of millions of dollars, a federal administrative law judge has found.
That finding is part of an initial ruling that Jacob Keith Cooper of Washington violated various federal securities laws in his operation of his company Total Wealth LLC of San Diego and other entities, which had about 600 investors at the end of 2014.
The estimated total losses to Total Wealth and Altus Funds investors could be as high as $43.9 million, according to the administrative law judge who heard the case in an administrative action brought by the Securities and Exchange Commission.
"Despite enormous losses for their investors, the revenue sharing and consulting agreements proved extremely lucrative for Total Wealth and Cooper," Chief Judge Brenda P. Murray found in the preliminary decision released last week.
Cooper could not be reached for comment. An attorney who represented him did not return an email asking about the judge's decision but Cooper had previously denied the allegations in court filings and told the judge that only about a third of Total Wealth investments included revenue sharing arrangements.
Murray found that Total Wealth received about $1.3 million in revenue sharing fees between October 2009 and September 2014. Cooper, through his company, Pinnacle Wealth Group, also was paid consulting fees of about $1.4 million.
In about February of 2010, for example, Cooper began directing $2.4 million in client funds into a company called Life's Good. About a week later, he entered into a consulting agreement with the company only to be told in June that Life's Good was a Ponzi scheme, the decision says.
Under one arrangement, a company called Denver Financial Group was to pay $60,000 a month to Cooper for consulting services. Cooper claimed he did the consulting over the phone and had no written work to show for it, the judge found.
In addition, Total Wealth's records showed that Cooper's pay from February 2010 to December 2014 was nearly $1.9 million.
The judge found that: Cooper violated antifraud statutes; made false statements to potential investors or failed to provide adequate information on revenue sharing and consulting agreements; misstated the depth of his research into investment opportunities; his businesses amounted to fraud schemes; and he acted with the intent to defraud investors.
The proposed decision would bar Cooper from the securities industry, order him to repay $1.8 million for failing to disclose his revenue sharing and consulting arrangements to investors and to pay fines of $780,000.
Cooper can file a petition to contest the findings before they become final.