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halts fraudulent day-trading scheme
May 25, 2011--A California federal judge has
frozen the assets of securities day-trading
business that allegedly bilked senior
citizens of about $3.3 million over a
The Securities and Exchange Commission
obtained the emergency freeze from U.S.
District Judge Margaret Morrow of the
Central District of California shortly after
it charged Robert C. Butler with fraud.
According to the complaint, Butler, of
Bermuda Dunes, Calif., operates out of his
He allegedly dazzled investors with his
multiple computer screens and a purported
proprietary trading program.
Butler promised exorbitant returns through
investments in his hedge fund, but instead
stole $1.6 million and lost the rest in
trading, the complaint says.
The SEC alleges Butler raised the money from
January 2009 to last March from 17
investors, most of whom were senior citizens
living near Indio, Calif.
The complaint says Butler sent investors
false account statements that grossly
inflated the hedge fund balances. One
statement showed a fund balance of $8.9
million when the true balance was $22, the
Butler lied that he was a graduate of MIT
and concealed from investors his Chapter 7
bankruptcy filing in 1998, the SEC says.
Despite investors’ requests, Butler has
failed to return their money and continues
to solicit new funds while attempting to
convince them that repayments are
forthcoming, according to the agency.
Butler is accused of violating the
anti-fraud provision of the Securities Act
of 1933, the Securities Exchange Act of 1934
and the Investment Advisers Act of 1940.
The SEC is seeking preliminary and permanent
injunctions, disgorgement, and fines.
Securities and Exchange Commission v.
Butler, No. 11-CV-3792, complaint filed
(C.D. Cal. May 3, 2011).