Mark Bloom and Firm North Hills Management LLC Charged with Fraud
On September 6, 2016, the Securities and Exchange Commission (“SEC”) obtained a final judgment against Mark Evan Bloom and his advisory firm, North Hills Management, LLC, for securities fraud in a civil enforcement action filed on February 25, 2009. The judgment orders more than $30 million in disgorgement, which is deemed satisfied by an order to pay restitution of the same amount in a parallel criminal action, in which Bloom was sentenced to three years of imprisonment.
The SEC’s complaint alleges that Bloom, through North Hills, raised approximately $30 million from 40 to 50 investors between 2001 and 2007, telling them he would invest their money in North Hills, L.P. (the Fund), the assets of which would be allocated across multiple funds and fund managers to ensure diversification and moderate risk. Instead, Bloom misappropriated more than $13.2 million of investor funds to furnish a lavish lifestyle for himself and his wife that included the purchase of luxury homes, cars and boats. The remaining investor funds were invested, contrary to the Fund’s stated investment strategy, in a single fund known as the Philadelphia Alternative Asset Fund (PAAF). Bloom received undisclosed commissions from PAAF in excess of $355,000 over a 16-month period. PAAF itself was uncovered as a fraudulent scheme in June 2005.
In a consent judgment entered on October 22, 2009, Bloom was permanently enjoined from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and Bloom and North Hills were ordered to pay disgorgement, prejudgment interest, and a civil penalty in an amount to be determined by the Court upon the SEC’s motion. In a separate SEC proceeding, on January 29, 2010, Bloom was barred from association with any investment adviser and permanently suspended from appearing or practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies.
On July 30, 2009, Bloom pleaded guilty to a criminal information filed by the U.S. Attorney’s Office for the Southern District of New York charging him with securities fraud. On August 20, 2015, Bloom was sentenced to three years in prison followed by three years supervised release and, on January 15, 2016, was ordered to pay restitution in the amount of $30,563,790.07.
In a related case filed by the U.S. Commodity Futures Trading Commission, Bloom and North Hills were ordered to pay a $26 million civil monetary penalty.
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. Please note that the prior results discussed herein do not guarantee similar outcomes.