SEC Charges Barry Bekkedam In Connection with Banyon Fund – By: Brenda Hamilton
The Securities and Exchange Commission (the “SEC”) has filed securities fraud charges against Barry Bekkedam of Hobe Sound, Florida. Bekkedam is the former owner, Chairman, and Chief Executive Officer of Ballamor Capital Management, LLC (“Ballamor”), a formerly SEC-registered investment adviser located in Radnor, Pennsylvania.
The SEC’s complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, alleges that from April through October 2009, Bekkedam fraudulently induced, or assisted in inducing, his advisory clients and others to invest approximately $100 million in a fund that purportedly purchased lawsuit settlements from now-convicted Ponzi-schemer Scott Rothstein. The settlements Rothstein sold were not real and the supposed plaintiffs and defendants did not exist. Rothstein simply used the funds in classic Ponzi scheme fashion to make payments due to other investors and support his lavish lifestyle. Rothstein’s scheme collapsed in October 2009, and he is currently serving 50 years in federal custody.
The complaint alleges that, in early 2009, Bekkedam met George Levin, a Florida businessman, who was himself a Rothstein investor and had been raising capital from investors to purchase settlements from Rothstein since 2007. Levin’s investments with Rothstein were at risk if he could not find additional investors. In April 2009, Levin and Bekkedam formed a private fund called Banyon Income Fund, LP (the “Banyon Fund”) to enable Bekkedam to raise funds from clients and others to be invested exclusively in Rothstein’s settlements.
The SEC alleges that, when soliciting his advisory clients and other prospective investors to invest in the Banyon Fund, Bekkedam made material misrepresentations and omissions regarding the level of due diligence he and Ballamor had performed, including their access to information confirming the existence of the settlement funds, the authenticity of Rothstein’s investment program, and the overall safety of investing in the Rothstein settlements. At the time that Rothstein’s scheme collapsed, Banyon Fund investors had received approximately $2 million in interest payments, with their approximately $100 million principal investments lost in the Ponzi scheme.
The SEC’s complaint further alleges that Bekkedam also concealed from his advisory clients and other prospective investors the nature of his relationship with Levin and the clear conflicts of interest resulting from the financial arrangements between Levin and Bekkedam and his affiliates. Throughout 2009, Levin and Bekkedam engaged in a series of transactions designed to funnel money to Bekkedam and his related entities in exchange for Bekkedam’s solicitation of investors in the Fund. The transactions included Levin’s agreement to purchase approximately $3 million in municipal bonds from Bekkedam, Levin’s agreement to help Bekkedam restructure $10 million of his personal and business debt, Levin’s agreement to invest up to $5 million in Ballamor, and Levin’s purported investment of $5 million in a bank co-founded by Bekkedam with an agreement to invest up to an additional $13 million.
The complaint alleges that Bekkedam violated Section 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and seeks a final judgment ordering a permanent injunction, disgorgement of ill-gotten gains together with prejudgment interest, and a civil penalty against Bekkedam.
The SEC’s investigation was conducted by Kelly L. Gibson and supervised by Brendan P. McGlynn, in the Philadelphia Regional Office. The SEC’s litigation is being handled by Christopher R. Kelly and supervised by G. Jeffrey Boujoukos. The investigation followed an examination conducted by Philadelphia Regional Office examination staff Andrew B. Green, Kevin P. Logue, William M. Lavin and Ly T. Nguyen, under the supervision of Frank A. Thomas.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490, Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 , IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or [email protected]. Please note that the prior results discussed herein do not guarantee similar outcomes.
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