A Charlotte investment adviser has been operating a scheme to charge “grossly excessive” fees, the U.S. Securities and Exchange Commission said Friday in a lawsuit that contains other allegations of fraud and misleading acts by the company.
Yatalie Capital Management and principal Frank Dappah operated with “a severely reckless disregard for the truth,” the suit says. The seven-count civil suit lists allegations that include altering client agreements to hide fraud, making false statements on forms submitted to the commission and using false and misleading claims in advertisements.
In one example, the SEC said, Dappah, 33, posted a video to YouTube in which an apparent client gave a positive testimonial. But, the SEC said, the person was actually a paid actress who was never a client of Yatalie’s.
Dappah is representing himself in the case. He did not return a call seeking comment.
The company misled the public in other ways, the commission said, including claiming on its website that it has clients “from nearly every corner of the globe.”
Many of the company’s customers had individual retirement accounts, which would be charged unauthorized fees “far in excess” of what was in client agreements, the suit said. One client who invested $22,924 on Oct. 30, 2012, had more than $9,200 taken from her account by this past July without authorization, the SEC said.
Dappah, who had the ability via an online portal to change the amount of fees charged to clients, would misuse the portal to impose fees without alerting them, the SEC alleges. Dappah would then alter client agreements to cover up his attempts to collect the additional fees, according to the suit. The alterations showed he was allowed to charge clients as much as $300 an hour for consultations by phone or in person, according to allegations.
The company made other false statements to the SEC, including that it had $1 million in discretionary assets under management in June, July and August when the figure was actually roughly $140,000, the suit says.
According to the SEC, the company first registered with the commission in 2010. The SEC said the address it has on file for the company is 3623 Latrobe Drive, Suite 227. Researcher Maria David contributed.
Roberts: 704-358-5248; Twitter: @DeonERoberts
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