San Antonio lawyer used investment funds as a “piggy bank” to pay for personal and business expenses

Federal securities regulators have accused a San Antonio lawyer and investment advisor of using money collected from investors as his own “piggy bank” to pay for his personal expenses and those of his businesses, including a pinball machine manufacturer.

Securities and Exchange Commission Alleges Robert Jeffrey Mueller Spent Over $ 1.5 Million in Investor Money to Pay for Second and Third Weddings, Engagement Rings and Wedding Rings for Both Wives, Divorce, Cruises vacation, her daughter’s tuition and a condo in Hawaii.

Mueller and his Deeproot funds “funneled more than $ 30 million” in investor funds to companies he controlled, including Deeproot Pinball, according to the SEC. Last year the pinball company was developing its first game, “Retro Atomic Zombie Adventureland.”

Mueller has raised about $ 58 million from nearly 300 investors through Deeproot Funds over several years, the SEC alleges in a civil lawsuit filed in federal court in San Antonio. The agency wants a court to order Mueller to hand over his allegedly ill-gotten gains.

Appeals to Mueller, 46, and his lawyer were not returned on Wednesday.

Mueller asserted his Fifth Amendment right against self-incrimination when the SEC attorney questioned him about the use of the assets of the funds he advised to pay for personal expenses, according to the lawsuit.

The Texas State Bar website shows Mueller has no disciplinary history and is licensed to practice law.

Mueller faces various charges related to securities fraud. The SEC seeks to prevent him from offering or selling securities and to prohibit him from acting as an officer or director of any issuer of securities.

Mueller and Deeproot Funds were investment advisers to two mutual funds launched in 2014. They persuaded investors, many of whom are retirees, to cash out their annuities and individual retirement accounts to invest in the funds, according to the SEC lawsuit.

Investors have been told their funds will be invested in life insurance policies and Deeproot-related businesses to provide “relatively safe returns,” the complaint says. Mueller used a company called Policy Services Inc. to purchase life insurance policies for the funds. But the SEC says he used Policy Services bank accounts to pay for personal expenses. Less than $ 10 million has been spent on policies, the SEC adds.

The private placement memoranda issued to investors “did not consistently describe how funds would invest in Deeproot affiliates,” the lawsuit said. A 2015 version of a PPM for one of the funds, however, described an investment in Deeproot Tech and its “one-off project,” Deeproot Pinball, in exchange for Class B shares in the pinball company.

The lawsuit adds that the funds never actually received any property or other interest in exchange for the significant assets that went to the various entities of Deeproot. These Deeproot companies are listed as “relief defendants” in the lawsuit. These companies are not charged with any wrongdoing, but their operations were financed with assets of the funds, according to the SEC.

“Mueller falsely informed investors and potential investors that Deeproot and Policy Services were structured to minimize the risk of this type of fraud then occurring,” added the SEC.

Since the first investors joined the funds in 2015, according to the SEC, various life insurance policies and Deeproot-affiliated business ventures have generated less than $ 1.9 million in revenue. Still, Mueller paid some investors $ 2.8 million in monthly return.

Bank account statements show that at least $ 820,000 in payments were made to some existing investors from money raised through contributions from new investors to the funds under a ‘Ponzi scheme’. adds the SEC.

In an interview last year, Mueller said he chose San Antonio to start Deeproot Pinball because he spent most of his life here and because the Texas economy is favorable to manufacturing and pinball development.

[email protected]

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

*