The Securities and Exchange Commission (SEC) filed charges against an Ohio-based businessman who set up a digital asset scam defrauding around 150 investors, among which many physicians.
Michael W. Ackerman allegedly, along with two other businessmen, raised at least $33 million from investors, claiming he developed a proprietary algorithm that traded in cryptocurrencies and generated extraordinary profits. Complaints with SEC claim that one of the business partners, who was also a physician, introduced physicians to financial opportunities in two entities, Q3 Trading Club and Q3 I LP, where they invested. The complaints allege that Ackerman deceived investors about the performance of his digital currency trading, his use of investor funds and the safety of their investments. Allegedly, he falsified screenshots of the Q3 trading account showing extraordinary profits, holding assets of as much as $310 million. In reality, the Q3 account did not hold more than $6 million at the most. Ackerman used the $7.5 he obtained from investors to enrich himself, renovate a house, purchase jewelry, multiple cars and pay for personal security services.
Eric I. Bustillo, Director of the SEC’s Miami Regional Office, commented:
As alleged in our complaint, Ackerman lured investors, many in the medical profession, into falsely believing that he generated extraordinary profits from his algorithmic trading strategy. Ackerman exploited popular interest in digital assets as a means to obtain millions of dollars for his personal use.
Many cases of fraud exploit the trust generated by such things as a common profession. The SEC’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force have issued an Investor Alert to educate investors on how to avoid making decisions based on common ties with the person suggesting the investment.
SEC’s complaint against Ackerman was filed in federal court in New York, charging him with violations of the antifraud provisions of the federal securities laws. SEC seeks permanent injunction, disgorgement plus pre-judgment interest, and a civil penalty. The U.S. Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission also filed charges against Ackerman.