Printz Capital, a Philadelphia-based investment adviser controlled by Alfred Clay Ludlum III, also scammed investors, which led to a $1.5 million default judgment against the firm and affiliates.  That was for selling bogus unregistered offerings by affiliated entities - and it includes disgorgement, prejudgment interest and civil penalties. 

The "Prize for Printz" Capital also scammed the SEC, by repeatedly filing erroneous Forms ADV since its formation in 2006, which enabled the firm to be inappropriately registered with the SEC. 

        SEC Allegations re: Erroneous ADV Filings.    Printz registered with the SEC in 2006, the year it was formed and remained that way even though it never held more than $10 million in assets under management.  On 3/30/09, Printz stated in its annual update to Form ADV that it was no longer eligible to register with the Commission because it had 58 non-discretionary clients and $4 million in assets under management - rather than 100 clients and $30 million in assets under management as it had reported in its 2/27/08 annual Form ADV.   The firm failed to file Form ADV-W.  One year later, on 3/4/10, Printz filed an annual update to Form ADV, and again stated no longer was eligible to remain registered with the Commission - having 20 nondiscretionary accounts with $5 million under management.  Again, Printz never filed the required Form ADV-W as required. It's likely Ludlum used the Printz Capital's status as an SEC-RIA to gain credibility with investors - this leads us to the next aspect of Ludlum's scam.

    SEC Allegations re: Unregistered Offerings.   On 3/15/11, a final judgment was entered by default against Printz Capital that, among other things, ordered Printz Capital, jointly and severally with the other Printz Entities, to pay over $1.5 million in disgorgement, prejudgment interest, and civil penalties.  In its complaint, the SEC alleged that Printz Capital, acting through Ludlum, made fraudulent misrepresentations and material omissions to investors concerning unregistered offerings of equity and debt securities in the Printz Entities.  Some of these investors were Printz Capital advisory clients.  These investors were told that their funds would be used for working capital and to grow and operate the businesses of the Printz Entities.  In fact, however, Ludlum used most of these funds to support his lifestyle, pay his personal expenses, and repay other investors.  In addition, it's alleged that Printz Capital fraudulently obtained loans from one advisory client and transferred funds from 3 advisory client accounts to accounts controlled by Ludlum without those clients’ consents.

The Printz Entities, including Printz Capital, failed to register their securities offerings with the Commission, even though no exemption from registration applied.  In addition, Printz Capital willfully made untrue statements of material fact in its Forms ADV by falsely representing that it did not recommend securities to advisory clients in which it had an ownership interest when, in fact, Ludlum was recommending that his clients purchase securities offered by the Printz Entities.  The complaint also alleged that Printz Capital failed to make available to the Commission complete and accurate records concerning its business in response to subpoenas and requests issued by the Commission staff.

Additional hearings will be conducted on this matter.   [SEC 40 Act Release 3183, 3/31/11]