SEC Announces Fraud Charges Related to Wisconsin Investment Fund
The Securities and Exchange Commission has charged a handful of individuals and their companies with fraud and other violations in connection with their operation of the Greenpoint Tactical Income Fund, a Wisconsin-based private investment fund that claims “remarkable returns” on its purported investments in an illiquid portfolio of gems, minerals, and private equity.
The Securities and Exchange Commission has charged a handful of individuals and their companies with fraud and other violations in connection with their operation of the Greenpoint Tactical Income Fund, a Wisconsin-based private investment fund that claims “remarkable returns” on its purported investments in an illiquid portfolio of gems, minerals, and private equity.
The defendants include Bluepoint Investment Counsel LLC, Michael Hull, Christopher Nohl, Greenpoint Asset Management II LLC, and Chrysalis Financial LLC.
Nohl owns Chrysalis Financial, and Hull owns Greenpoint and co-owns Bluepoint, a now de-registered investment adviser that claimed to have as much as $145 million in assets under management.
The pair, through their respective entities, manage Greenpoint Tactical Income Fund. Bluepoint, through Hull, recommended that all individual clients invest in the Greenpoint Tactical Income Fund and other affiliated Greenpoint Funds.
The SEC alleges that the defendants helped generate these supposed 65 percent returns by inflating the value of a private company that the fund invested in and by valuing physical gems and minerals in the fund’s portfolio through methods that failed to comply with the procedures contained in the fund’s operating agreement.
According to the SEC, the defendants improperly charged the fund excessive management fees of more than $13 million based on inflated and improperly-determined valuations. In addition, the fund supposedly paid the defendants more than $5.9 million in fees since 2017, while telling investors that the fund had no liquidity to meet redemption requests.
The SEC also alleges that the defendants engaged in self-dealing and failed to disclose their conflicts of interest, which included undisclosed short-term loans to the fund, some with annualized interest rates exceeding 100 percent, and the fund’s undisclosed payment of service fees to entities owned by Nohl and Hull.
The SEC seeks injunctive relief, disgorgement of ill-gotten gains, and civil penalties.
