The SEC charged adviser Nicholas Mitsakos and his firm Matrix Capital Markets last week with fraud for allegedly stealing $800,000 in client funds and luring investors into his scheme with projected returns of as much as 66%.
Authorities say his boasting wasn't just limited to potential returns on investments; Mitsakos, 56, told prospective clients that his firm's AUM was $60 million at a time when the firm had no assets, according to the SEC's complaint.
"We allege that Mitsakos and his firm tried to lure prospective investors with a mirage of assets under management and phony performance results, and when they finally won some actual business from a client, they proceeded to steal a large portion of it," Andrew Calamari, director of the SEC's New York regional office, said in a statement.
Mitsakos founded Matrix Capital in San Francisco in October 2013, according to the SEC complaint. To lure in investors, Mitsakos and his firm fabricated a hypothetical portfolio of investments earning 20% to 66% in annual returns and passed it off to investors as real trading, the commission alleges. His marketing materials also included a monthly newsletter, the SEC says.
His first client gave him $2 million to manage in September 2015, and Mitsakos used approximately $800,000 to pay for personal expenses, such as credit card bills and payments for his Mercedes, the SEC charges.
The SEC filed its complaint in U.S. District Court for the Southern District of New York; the U.S. Attorney's Office there also announced criminal charges against Mitsakos this week.
Mitsakos' LinkedIn profile says he also serves as chairman of a mining company, IMEx Minerals, based in Los Angeles, San Francisco and Cordoba, Argentina.
Mitsakos could not be reached for comment. It is not known whether he has an attorney.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access