Quantcast
Get breaking news alerts via email

Click here to manage your alerts
Two Utahns accused in kickback scheme

Investments » Federal regulators say two failed to tell clients of fee arrangements.

First Published Apr 16 2014 01:27 pm • Last Updated Apr 17 2014 10:00 pm

Federal regulators are alleging two Utah men and their investment businesses failed to disclose to clients they were receiving kickbacks for steering investor monies into certain funds.

The Securities and Exchange Commission also said Total Wealth Management CEO Jacob Keith Cooper of Washington and President Nathan McNamee of Hurricane violated federal laws though their use of unregistered investment funds, by not engaging independent auditors and failing to conduct due diligence before investing clients’ monies.

Join the Discussion
Post a Comment

Total Wealth’s so-called Altus pooled-investment funds operated by the Utah men and a California resident, David Shoemaker of San Diego, held at least $55 million from at least 86 investors, according to the SEC administrative complaint filed Tuesday.

"Investment advisers owe a fiduciary duty of utmost good faith and full and fair disclosure to their clients," Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said in a news release. "Total Wealth violated that duty with its pervasive practice of placing clients in funds holding risky investments while concealing the revenue sharing fees they paid themselves."

An attorney for Total Wealth had no comment on the case.

The SEC complaint also says the three failed to disclose to clients the conflicts of interest created by fee-sharing agreements with funds in which most of their client’s money was placed.

Beginning in 2009, Cooper formed several Altus funds that funneled investors monies into certain entities, almost all of which had revenue-sharing arrangements with Total Wealth.

Those fees and the conflicts of interest created by them were not disclosed to investors, the SEC says. Total Wealth also did not conduct due diligence on the funds in which it invested.

"Indeed," says the complaint, "as early as 2010, Total Wealth knew at least two of the funds held in the Altus Capital Fund had financial issues."

Those included one company that had expenses, mostly commissions and fees, of $700,000 but income of only $5,000, the SEC alleges.


story continues below
story continues below

Total Wealth also hired an unqualified accountant to prepare financial statements, then the same firm audited those statements, a violation of regulations that call for an independent auditor, the agency says.

Two California investors who sued Total Wealth, Cooper and others late last year said they were drawn to invest by Cooper’s statements on his weekly radio show called "Minding Your Own Business" where he discussed investments, including in his own companies.

Cooper told listeners about Total Wealth’s investments that were safe even in a downturn and that returns had been up to 18 percent, according to the lawsuit.

The commission has ordered a public hearing in no later than 60 days to gather evidence and ordered those named in the action to respond within 20 days to the allegations that will be heard by an administrative law judge.

tharvey@sltrib.com



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.