The founder of Blazer Capital Management, a “concierge” firm targeting professional athletes and other HNWIs as clients, has been accused of taking $2.35 million from five clients without permission so that he could invest in two film projects. The case bears comparison with that of Charles Ponzi (pictured).

The US Securities and Exchange Commission is pressing fraud charges against a financial adviser from Pittsburgh in Pennsylvania whom it accuses of taking money without permission from the accounts of several professional athletes in order to invest in film projects and make Ponzi-like payments. Regulators uncovered the unauthorised withdrawals that Louis Martin Blazer III made from his clients’ accounts and asked him to explain the transactions, he lied and produced false deal documents that he created after the fact in a failed attempt to hide his misconduct.

The SEC alleges that Blazer, through Blazer Capital Management, took about $2.35 million from five clients without their authorisation so he could invest in two film projects. He had a personal financial interest in the development of both films, one called “Mafia the Movie” and the other called “Sibling.” In one instance, Blazer actually asked an athlete for backing in one of these investment; when that client expressly turned him down, Blazer allegedly took $550,000 from the client’s account anyway and invested the money in the film projects.

The SEC further alleges that the client later learned about Blazer's treachery and demanded repayment, threatening to go to court. Blazer then took money out of a different athlete’s account to make the repayment in a fashion reminiscent of Charles Ponzi, the 'pyramid' fraudster of the 1920s (pictured).

“When our examiners put him on the spot, he resorted to false statements and false documents,” said Andrew Calamari of the SEC’s New York Regional Office hotly.

Blazer has agreed to settle the charges without admitting or denying the allegations.  The settlement is subject to court approval with determination of disgorgement and financial penalties to be decided by the court at a later date. The SEC’s complaint charges Blazer with breaking s17(a) Securities Act 1933, s10(b) Securities Exchange Act 1934 and Rule 10b-5 (issued under that section), and ss206(1) and 206(2) Investment Advisors Act 1940.