Securities and Exchange Commission v. Delsa U. Thomas, et al., Civ. Action No. 3:13-cv-00739-L (N.D. Tex., Dallas Division, filed February 14, 2013)

SEC Sues Dallas Investment Adviser Principal for Conducting a Fraudulent High-Yield Investment Scheme

The Securities and Exchange Commission recently charged a Dallas investment adviser principal with defrauding investors out of $2.3 million in a high-yield investment scheme. The Commission's complaint, filed in Dallas federal court, alleges that Delsa U. Thomas, The D. Christopher Capital Group, LLC ("DCCMG"), and The Solomon Fund LP, lied to investors about the safety and potential returns of the investments. For example, the complaint alleges that Thomas promised that $1 million in investor funds would remain safely invested in U.S. Treasury securities and would yield 650 percent returns in 35 banking days, supposedly from profits in Thomas's high-yield investment program. While Thomas did purchase U.S. Treasury securities, she immediately margined those securities, commingled the margin proceeds with other investor funds, and sent the funds to a foreign intermediary, none of which was disclosed to investors. According to the Commission, Thomas used other investor funds to make Ponzi payments to investors in earlier investment programs she had sold, and for personal expenses. Finally, the complaint alleges that DCCMG was improperly registered with the Commission as an investment adviser, a violation that Thomas aided and abetted.

The complaint charges Thomas, DCCMG, and the Solomon Fund with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Thomas and DCCMG with violating Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The complaint also alleges that DCCMG violated Section 203A of the Advisers Act and that Thomas aided and abetted this violation. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest and civil penalties against each of the defendants.

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