An investment advisor based in Westchester, N.Y. fraudulently convinced members of his religious community to invest with the promise of greater returns, but wound up losing most of their money, according to a complaint filed by the Securities and Exchange Commission.
According to the complaint, in addition to being an advisor, Evarist C. Amah was a member of the Grail Movement, a spiritual organization originally formed in Austria in the 1940s that follows the teachings of Oskar Ernst Bernhardt's In the Light of Truth: The Grail Message.
Beginning in April 2016, Amah began soliciting other members of the religion, eventually raising nearly $700,000 from nine congregants. Amah also agreed to operate as an advisor for eight of these investors, who hoped their promised returns could boost their own revenue and offer “financial support” for the movement.
“Despite losing over 97% of his advisory clients’ assets just over five months after starting to trade with their money, Amah repeatedly claimed that he had achieved modest returns of between 3% and 5% and stated that he could increase the returns his strategy was able to generate if his clients invested additional assets,” the complaint read.
In April 2016, Amah and an unnamed investor based in Nigeria or Italy discussed a plan to generate returns for investors to benefit the Grail Movement, eventually setting up a ‘pooled investment vehicle’ which he never established legally, instead just managing them in his hedge fund. On behalf of Amah, the unnamed investor eventually emailed 20 Grail Movement members documents about the purported investment vehicle, with Amah’s spreadsheet promising total annual returns over 65% over three years.
But the documents didn’t disclose that the investors’ funds actually would be invested in the Lumine Fund, a hedge fund supervised by Amah.
Amah didn’t provide offering documents for the fund, did not have them sign Limited Partnership Agreements, nor offer quarterly statements, and didn’t tell other limited partners in the funds about these new investors. Additionally, he didn’t disclose that the fund had lost more than half of its asset value since its inception, according to the complaint.
Amah began trading assets from the Grail Movement’s advisory clients in October 2016, and by the end of that year, Amah’s trading reduced the initial investment by almost 73%, according to the SEC. On two occasions, Amah fabricated statements that purported to show modest returns or small losses, according to the complaint; for example, in reality two account balances were $4,907 and $1,859, but the fabricated documents showed the assets were $439,751 and $325,794, respectively, according to the complaint.
The SEC’s complaint was filed in New York federal court, and the commission is seeking disgorgement and a civil penalty, as well as a permanent injunction for Amah, who could not be reached for comment.
