Two defendants in one of the Osage LLC lawsuits are now facing federal charges after the U.S. Securities and Exchange Commission filed suit against accusing the men of defrauding investors and misappropriating about $1.4 million.
On Nov. 7, the SEC filed a complaint in U.S. federal court for the Eastern District of Pennsylvania against Christopher K. Schrichte and Howard C. Hill who created the New Market Technology Fund. Two companies managed by the men are also named as defendants, which are New Market Global Management I, LLC and New Market Technology Fund I.
The complaint also demands a jury trial for the men who created the New Market Technology Fund to invest in technology companies in 2001 and since that time, 75 investors have invested approximately $21 million in the fund.
The complaint then states: “However, since at least 2007, Schrichte and Hill looted the (New Market) Fund and the software company it owned to line their own pockets to the detriment of the Fund and its investors.”
Schrichte and Hill are also named as defendants, along with former Osage LLC CEO Carol Leese and various business associates in a May 2015 lawsuit filed by the Nation in Osage County District Court regarding investment and business transactions made while Leese was CEO.
The May 2015 LLC case remains pending as of Dec. 30, according to the Oklahoma state court online database. Two other LLC cases filed against Leese and other business associates are also pending.
In a Nov. 7 news release, the SEC said “from 2007 to 2014, Schrichte and Hill improperly took almost $1 million in interest-free loans from the Fund and nearly $500,000 in unauthorized and undisclosed transfers from the Fund and the Software Company. Schrichte used the funds to pay his mortgage, personal property taxes, and other living expenses, and Hill used the funds to pay for personal living expenses, purchase luxury goods, and pay personal debt. In addition, when Schrichte and Hill sought additional investment money to keep the Fund and the Software Company afloat, they materially misrepresented the nature and extent of the payments Schrichte and Hill took from the Fund and the Software Company.”
As a result of the complaint allegations, the SEC argues Schrichte and Hill violated several sections of the Securities Exchange Act of 1934 and sections of the Investment Advisers Act of 1940.
According to the complaint, Schrichte and Hill are identified as managing members of the New Market fund with Schrichte living in Missoula, Mont., and Hill lives in Washington, D.C.
The complaint also notes the men took loans out of the fund for personal expenses and in addition to those loans, Schrichte and Hill also paid themselves a total of $499,558 from the New Market fund and a non-profitable software company in which the New Market fund holds a majority interest.
The SEC is asking the court to find the two men guilty of the various charges and seeks civil penalties and further relief the court “may deem just, equitable and appropriate.”
By
Benny Polacca
Original Publish Date: 2017-01-17 00:00:00
