February 11, 2020/US SEC
The Securities and Exchange Commission today filed charges against an Ohio-based businessman who allegedly orchestrated a digital asset scheme that defrauded approximately 150 investors, including many physicians.
The SEC alleges that Michael W. Ackerman, along with two business partners, raised at least $33 million by claiming to investors that he had developed a proprietary algorithm that allowed him to generate extraordinary profits while trading in cryptocurrencies. According to the SEC’s complaint, physicians in particular made investments in two entities, Q3 Trading Club and Q3 I LP, when they were introduced to the digital currency investment opportunity by one of the business partners who also is a physician. The SEC’s complaint alleges that Ackerman misled investors about the performance of his digital currency trading, his use of investor funds, and the safety of investor funds in the Q3 trading account. The complaint further alleges that Ackerman doctored computer screenshots taken of Q3’s trading account to create the illusion that Q3 was highly invested in cryptocurrencies and was extraordinarily profitable, holding assets of as much as $310 million. In reality, as alleged, at no time did Q3’s trading account hold more than $6 million and Ackerman was personally enriching himself by using $7.5 million of investor funds to purchase and renovate a house, purchase high end jewelry, multiple cars, and pay for personal security services.
“As alleged in our complaint, Ackerman lured investors, many in the medical profession, into falsely believing that he generated extraordinary profits from his algorithmic trading strategy,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use.”
Many fraudsters take advantage of the trust that having something in common creates, such as a common profession. The SEC’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force have issued an Investor Alert with tips on how investors should avoid investment decisions based solely on common ties with someone recommending or selling the investment.
The SEC’s complaint, filed in federal court in New York, charges Ackerman with violations of the antifraud provisions of the federal securities laws. The SEC seeks a permanent injunction, disgorgement plus pre-judgment interest, and a civil penalty. In parallel actions, the U.S. Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission filed charges against Ackerman arising from similar conduct.
The SEC’s continuing investigation is being conducted by Alexander Charap and Kathleen Strandell in the Miami Regional Office and supervised by Jessica M. Weissman and Glenn S. Gordon. The SEC’s litigation is being led by Amie Riggle Berlin and supervised by Andrew Schiff. The SEC appreciates the assistance of the Commodity Futures Trading Commission, the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Department of Homeland Security.