The Securities and Exchange Commission charged a Tallahassee-based investment adviser firm, Cambridge Capital Group Advisors, LLC, on Thursday with allegedly defrauding 20 investors. Most of the investors were retired NFL players who had joined a class-action lawsuit against the league claiming they suffered brain injuries as a result of concussions. The SEC also charged the firm’s president Phillip Timothy Howard, a Florida attorney, and Don Warner Reinhard, a former registered investment adviser. Howard, who represented the retired players in the class action lawsuit, ran two proprietary hedge funds operating out of his law offices and according to the SEC’s complaint, and raised at least $4 million from the retired players, about half of whom rolled over their NFL 401(k) accounts to the hedge funds. The funds invested almost exclusively in settlement advance loans to more than 70 of Howard’s NFL class-action clients rather than in a variety of prudent investments. Reinhard had served jail time for bankruptcy and tax fraud, and had been barred by the SEC from working for any investment adviser firm. Howard also allegedly defrauded investors by borrowing $612,000 in undisclosed personal mortgage loans from the hedge funds, which he never repaid, and Howard and Reinhard also allegedly used investor funds to pay themselves fabricated “broker fees” on settlement advance loans to Howard’s legal clients. The SEC’s suit seeks permanent injunctions, disgorgement of allegedly ill-gotten gains, prejudgment interest, and financial penalties.
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