The US Securities and Exchange Commission has charged a purported hedge fund manager in New York City with a brazen offering and investment adviser fraud, claiming that it has thereby put a stop to a long-standing scam.

The SEC alleges that, since at least 2014, Nicholas Joseph Genovese and his hedge fund Willow Creek Investments LP raised more than US$5.3 million from at least six HNW investors by 'affirmatively misrepresenting' his experience in money-management and the securities industry, along with the size of his operations. It has charged him with falsely stating that he managed $4 billion of the Genovese Drug Store family's assets; that his hedge fund's investment advisor had $30-39 billion of assets under management rather than the actual $10 million; that his advisory firm had between 42 and 60 employees and not the actual 10; and that his hedge fund had investment gains of 30-40% per annum, whereas it actually sustained losses. Genovese also allegedly lied about his education and work experience.

The SEC goes on to allege that Genovese and his advisory firm Willow Creek Advisors LLC misappropriated investors' funds to fund securities trading in Genovese's personal brokerage account, which sustained more than $8 million of trading losses between 2015 and 2017, and to fund Genovese's lifestyle by paying approximately $263,000 for, among other things, ATM cash withdrawals, food, hotel and travel in a Bentley. If the allegations turn out to be true, his is a typical story for a Ponzi schemer.

Genovese, according to the SEC, is already a convicted felon who lost or stole most of the money that investors entrusted to him in a previous incarnation. His fraud, according to the SEC's complaint which it lodged in the US District Court for the Southern District of New York, is still going on. Apparently money came into his account recently.

The SEC's complaint charges Genovese and his hedge fund with breaking s17(a) Securities Act 1933 and s10(b) Securities Exchange Act 1934 and Rule 10b-5 thereunder, and charges Genovese and his advisory firm with breaking ss206(1), 206(2) and 206(4) Investment Advisors Act 1940 and Rule 206(4)-8 thereunder. The SEC is asking the court for a temporary restraining order to freeze assets. Its eventual aim is a final judgment that orders Genovese and his hedge fund to disgorge all ill-gotten gains and pay prejudgment interest, plus punitive financial penalties.