Using fake persona, advisor defrauds pro athlete and his wife of $1.2M: SEC

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Using a fake persona and misleading reports, an advisor pocketed nearly $1 million in fraudulent fees by secretly billing a professional athlete and his wife more than a promised discounted rate, the SEC alleges.

Jeremy Joseph Drake charged 100 basis points after promising his clients a cut-rate “VIP” plan of 15 to 20 basis points of their assets under management, investigators say.

The clients paid $1.2 million over the agreed-upon rate during a nearly four year period, while Drake collected $900,000 in incentive-based compensation, according to court documents filed this week by the SEC. The couple was not named in the regulator's complaint .

“These two clients trusted Drake to manage their investments, but all the while Drake was lying to them and then tried to conceal his lies by fabricating documents and even acting as an imposter to back up his claims,” Michele Wein Layne, director of the SEC’s Los Angeles regional office, said in a statement.

An attorney for Drake, who is currently registered with Trimsail Capital Management, a Los Angeles-based RIA formed earlier this year according to the SEC, did not respond to a request for comment. Trimsail Capital also did not respond.

To conceal trumped up fees, Drake "went to elaborate lengths," sending his clients misleading fee reports and emails, and even creating a fake persona to buttress the scheme, according to the SEC.

After the couple voiced concerns over suspicious fees, Drake created “Ron Stenson,” a phony employee from Schwab, the custodian of the assets, to help corroborate his story, the SEC alleges. He also sent two fabricated letters on Schwab letterhead, regulators say.

Drake eventually admitted the lies to the athlete’s wife and warned her against reporting the misconduct, the regulator says.

“Upon discovery, the complaint alleges that Drake admitted to one of the clients that he had been lying and warned her that reporting his misconduct could result in bad publicity for her husband,” the SEC says.

Formerly of Los Angeles-based HCR Wealth Advisors, Drake ultimately held as much as $35 million of the clients’ assets and was the clients’ sole contact at the firm, the SEC says.

Drake was eventually discharged from HCR Wealth in June 2016, per BrokerCheck records. HCR Wealth could not be reached for comment.

“HCR commenced an investigation after receiving notice of a client (managed by Mr. Drake) inquiry regarding a duplicate monthly Schwab account statement,” according to a statement on file with BrokerCheck. HCR's ongoing investigation is “sufficient to reasonably conclude that Mr. Drake was involved in misconduct and falsifying documents with respect to the client's accounts,” per BrokerCheck.

“The hardest job I have is getting them to be normal,” Drake said about servicing athlete clients in a 2016 article in the L.A. Times. “It’s tough because these guys are risk-takers.”

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