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SEC freezes assets of adviser accused of theft

Federal securities regulators have frozen the assets of a Massachusetts man who is accused of stealing $1.1 million from investors by convincing them he ran a hedge fund.

Investment adviser Gregg D. Caplitz and his Insight Onsite Strategic Management in Wilmington transferred money from clients to another executive at the firm, whose family spent the funds at restaurants and gas stations and on legal bills, according to a complaint unsealed Monday in US District Court in Boston.

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The company reported in filings with the Securities and Exchange Commission that it had $100 million in assets under management. But it in fact has no assets, the SEC said.

“Caplitz and his firm conjured up a hedge fund to lure longtime clients into investing substantial amounts of money that became nothing more than a slush fund to pay bills for others,” said Julie M. Riewe, deputy chief of the SEC Enforcement Division’s Asset Management Unit.

A lawyer for Caplitz said he had just received the case and was not prepared to comment.

According to the SEC, the alleged scheme began around 2009. Caplitz convinced one client and his wife to invest $275,000 in the hedge fund that he claimed would generate about $1,000 per month in returns, regulators said. Caplitz also allegedly obtained funds from the retirement account of a 20-year client.

The SEC alleged that instead of investing the clients’ funds, Caplitz transferred their money to Rosalind Herman of Las Vegas, a friend who works at the firm. Investor funds also were transferred to her sons and another company.

The complaint seeks a permanent injunction against Caplitz and his associates, a return of the investors’ money, and a fine.

Beth Healy can be reached at
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