SECURITIES AND EXCHANGE COMMISSION v. HECKLER

On March 9, 2021, the Securities and Exchange Commission (“SEC”), represented by John V. Donnelly, III attorney at the SEC’s Philadelphia Regional Office filed a civil enforcement action against George Heckler (“Heckler” or “Defendant”), seeking injunctive relief, disgorgement of all ill-gotten gains among other reliefs for defrauding investors and two hedge funds. This case was filed in U.S. District Court for the District of New Jersey with Judge Andre M. Espinosa, Judge Leda D. Wettre, and Judge Madeline C. Arleo presiding. 

In its complaint, the SEC alleged that “between 2009 and 2019, Heckler defrauded investors and CV Special Opportunity Fund LP (“CV Special”) and Cassatt Short Term Trading Fund LP (“Cassatt”) (together, the “Funds”), two hedge funds he advised and controlled. He repeatedly misled investors by telling them they were earning consistent gains while, in reality, their money had not been invested as promised (or at all), and the value of the money that had been invested was decimated by poor performing investments.” and that “Heckler helped form Cassatt and CV Special as a means to shift and cover-up investor losses incurred by a predecessor fund that was also controlled by Heckler. After transferring poorly performing assets of the predecessor fund to CV Special and Cassatt, Heckler lied to investors about nearly every aspect of the Funds, including their basic purpose, investment strategy, and poor performance.”

The SEC further alleged that “Heckler, along with the fund administrator of Cassatt and CV Special (“Individual 1”), concealed the truth about the Funds by, among other things, providing investors with false account statements and Forms K-1 showing that Cassatt and CV Special consistently generated positive returns. Heckler also frequently used new investor capital raised through Cassatt to redeem existing investors. Over the course of the fraud, Heckler raised at least $90 million through the Funds and the Heckler Entities. Of this amount, Heckler used more than $30 million to repay prior investors. In that same time period, Heckler took more than $1 million for himself and his family in the form of purported fees or distributions.” and even further that “In addition, throughout 2018, Heckler made false statements directly to investors orally and in writing assuring them that their money was safe and blaming the delay in returning their capital on Individual 1’s departure.”

There are four claims for relief laid down by the SEC. The first claim is for violations of Section 17(a) of the Securities Act, the second claim for relief is for violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, the third claim of relief is for violations of Section 206(1) and (2) of the Advisers Act, and the last claim is for violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. 

In its prayer for relief, the SEC has requested the court to permanently restrain and enjoin Heckler from violating the laws alleged in the complaint, order disgorgement of ill-gotten gains derived and order Heckler to pay civil penalties. 

This case summary may not reflect the current position of the parties to this litigation or the status of this case. Sign up to view the latest case updates and court documents.