The Securities and Exchange Commission has filed a civil complaint in federal court accusing a West Palm Beach-based operator of raising approximately $750,000 from at least 30 investors through two purported pooled funds that were never legally formed. The regulator alleges the operator, along with his firm CMI Capital, LLC, doing business as Check Mate Investments, solicited investments beginning around January 2024, promising outsized returns from an options-trading strategy.
According to the SEC's filing, the operator leveraged his employment at a company that administers pension plans for police and firefighter retirement systems in West Palm Beach to build trust with prospective investors. Several of those who invested were current or retired law enforcement officers, the complaint states. The funds were pitched as vehicles that had delivered extraordinary performance, with investor letters in January, April, and May 2024 claiming the strategy had produced "year over year performance of 187% with 2023 being 331% returns."
The SEC alleges that the operator never opened any brokerage accounts in the name of the entity or the funds, and that his personal trading history showed years of losses. To create the illusion of success, the complaint describes how the operator posted "highly cropped screenshots of fake returns he had made on a practice trading platform" to a Facebook group chat, presenting them as real trades. In one instance in April 2024, he told the group that Fund 1 was "$40,000 away from reaching a million-dollar portfolio value" while sharing GIFs from the movie The Wolf of Wall Street.
By August 2024, an investor report claimed a 141.08% return since inception and a portfolio value of $5,062,702. The SEC asserts these figures were entirely fabricated. The actual trading strategy, the complaint alleges, "was unprofitable every month of trading during the Relevant Period," with aggregate trading losses of at least $428,000. Furthermore, the SEC claims the operator misappropriated at least $228,000 for personal expenses, including rent, restaurant bills, ATM withdrawals, and Cash App transfers.
The scheme began to unravel in August 2024 when investors grew suspicious, according to the filing. The defendants returned at least $375,000 that month, but the SEC is seeking injunctions, disgorgement, civil penalties, and conduct bars. The charges include violations of the Securities Act's anti-fraud provisions, the Exchange Act's registration and anti-fraud rules, the Advisers Act's anti-fraud sections, and the Investment Company Act's registration requirements.
This case echoes other recent enforcement actions targeting fabricated returns. For instance, the SEC recently shut down Navellier & Associates over similar allegations. In another matter, the SEC alleged that a Lugano co-founder fabricated diamond sales to defraud investors. These cases highlight the regulator's focus on fraudulent marketing of investment performance.
For financial advisors, the case serves as a reminder to conduct thorough due diligence on any investment product, especially those with unusually high returns. The SEC's complaint underscores the importance of verifying that funds are properly registered and that performance claims are backed by audited financials. Advisors should also be wary of investments that rely on social media or informal channels for solicitation.
The SEC's investigation is ongoing, and the civil action seeks to hold the operator and his firm accountable for what the regulator describes as a deliberate scheme to defraud investors, many of whom were public servants nearing retirement.
