According to records provided by the Securities and Exchange Commission (SEC), the SEC has filed charges against Manhattan-based lending company American Growth Funding II LLC, alleging the firm and its owner, Ralph Johnson, repeatedly lied to investors purchasing high-yield securities. The securities and investment fraud law firm Fitapelli Kurta is interested in speaking to investors who have lost money investing in American Growth Funding II.
According to the SEC, American Growth Funding II LLC and Ralph Johnson “promised investors 12-percent annual returns and falsely claimed its financial statements were being audited each year. AGF II, which raises capital from investors to provide loans to businesses, also made misrepresentations in offering documents about its management and concealed details about deteriorating loan values that could imperil full payment of the promised returns to investors.”
The SEC additionally alleges that American Growth Funding II LLC’s placement agent, Portfolio Advisors Alliance, its owner Howard Allen, and its president Kerri Wasserman were aware the offering documents were inaccurate, but continued using them to solicit sales.
The SEC’s filing alleges that American Growth Funding II LLC raised $8.6 million from investors between March 2011 and December 2013. Though the company represented in its offering documents that its financial statements had been audited, according to the SEC, “though Johnson knew this had been false.” Following are some other allegations made in the SEC’s complaint:
The offering documents represented that AGF II was governed by a Board of Managers comprised of Johnson and two other individuals when, in fact, the two individuals never agreed to serve in any managerial capacity.
Johnson caused AGF II to send out monthly account statements to investors that concealed the precariousness of its business. The company failed to disclose that it could not have possibly paid investors their stated account balances because the majority of AGF II’s loans were likely uncollectible at the time.
While PAA acted as the placement agent, Allen became aware by no later than June 2012 that AGF II’s offering documents were not accurate. But he continued using them to solicit investors without informing them the financial statements were unaudited.
Allen informed Wasserman that AGF II’s offering documents contained false information, but Wasserman took no action and the firm’s brokers continued using misleading documents to solicit investors.
The SEC’s action charges AGF II, PAA, Johnson, and Allen with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. It additionally charges Johnson, Allen, and Wasserman with aiding and abetting and control person liability. The action remains pending.
If you have lost money investing in American Growth Funding II LLC, you may be entitled to recover your losses. Call the securities and investment fraud law firm Fitapelli Kurta at 877-238-4175 for a free consultation. Fitapelli Kurta takes every case on a contingency basis, which means Fitapelli Kurta only gets paid if and when you collect money. By law there may be a limited window to file your claim, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.