The Securities and Exchange Commission has obtained a final judgment against Mohammed Ali Rashid, a former senior partner at private equity giant Apollo Management L.P., who secretly billed clients approximately $290,000 and used the funds for his personal expenditures, including family vacations, visits to a hair salon, purchases of designer clothing, and high-end electronics.
From at least January 2010 to June 2013, the SEC claims that Rashid received millions of dollars each year related to his advisory services as an Apollo partner. However, the SEC alleges that by 2010, he began submitting false expense reports to obtain reimbursement for claimed business expenses that were, in fact, his personal expenses. These included a New Year’s trip to Brazil, a friend’s bachelor party and wedding, a flight to the Super Bowl, and numerous dinners with friends and family at high-end Manhattan restaurants.
Rashid allegedly charged more than one thousand personal items and services to the private equity funds that he advised, including Apollo Investment Fund III LP, Apollo Investment Fund V LP, Apollo Investment Fund VI LP, Apollo Investment Fund VII LP, and Apollo Natural Resource Partners LP.
According to the SEC’s complaint, despite being caught by the firm and told to stop on two occasions in 2010 and 2012, Rashid continued to expense personal items to clients into 2013. After he was confronted about his expenses for a third time, Rashid admitted that he charged approximately $220,000 in personal expenses. A forensic accountant then uncovered additional personal expenses that Rashid improperly charged to clients.
After a nine-day bench trial where 33 witnesses testified, the district court found that Rashid had engaged in a pattern of repeatedly, knowingly and falsely describing personal expenses as business expenses.
The court ordered Rashid to pay a civil penalty of $240,000. Prior to the filing of the SEC’s complaint, Rashid repaid Apollo for the ill-gotten funds and Apollo reimbursed the affected funds.