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Securities News Releases
Thursday, June 07, 2012
Contact: Ryan Hobart, (573) 526-0949
Carnahan Seeks Recovery from St. Louis Investment Scheme Targeting Family and Friends
Jefferson City, MO– Missouri Secretary of State Robin Carnahan today announced an enforcement action against Grahame Rhodes of St. Louis, Missouri, concerning allegations that Rhodes took and then lost hundreds of thousands of dollars in a fraudulent investment scheme.
According to the cease and desist order issued by officials in Carnahan’s Securities Division, in 2004, Rhodes, who has never been registered as a securities agent or investment adviser in Missouri, began soliciting his in-laws and others to allow him to manage their investments.
The order alleges that Rhodes convinced investors that because of his day-trading of S&P 500 futures he was able to afford a nice home in an upscale suburb, expensive cars and private schooling for his children. Rhodes allegedly assured investors that investments up to $100,000 were guaranteed against loss and that Rhodes had, in the past, earned between 25%–50% profit on his investments.
“No matter how well you think you know someone, even relatives, it’s always important to check out the person and the investments they are offering,” Carnahan said. “Scam artists often try to exploit the trust gained through personal relationships, but one call to our investor protection hotline can help prevent that.”
The order states that in January 2012, when investors asked to have their funds returned, Rhodes provided a copy of his trading account that showed a balance in excess of $3.4 million. However, Rhodes allegedly later admitted that he “forged” the statement and the balance in the account was only around $44,000. The order also recounts an email from Rhodes to several of his investors that allegedly stated, “I acknowledge all the terrible things I have done and all the missed deadlines in the past … please give me an assurance that no investigations will be started.”
The cease and desist order alleges that Rhodes sold unregistered securities, acted as an unregistered investment adviser and as an unregistered securities agent and engaged in securities fraud by failing to disclose material information to investors. He faces up to $80,000 in penalties and costs and the possibility of paying restitution to harmed investors. Rhodes has 30 days to request a hearing and contest this matter. The Securities Division is cooperating in this matter with other law enforcement agencies.
For more information regarding investments and fraud protection, or for information regarding a company or representative, visit the secretary of state’s online Investor Protection Center at www.MissouriInvestorProtection.gov or call the toll-free Investor Protection Hotline at (800) 721-7996.
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To find out more about Missouri's Secretary of State's office, visit www.sos.mo.gov