SEC Charges Deeproot Funds and Principal with Defrauding Retirees
The White Law Group is investigating potential securities claims involving broker dealers and sales agents who may have improperly recommended Deeproot 575 Fund to investors.
According to its website, Deeproot designs, administers, and manages alternative private equity and debenture funds for investors. The company claims to target a lower risk profile by using a “proprietary, innovative allocation blend of collateralized assets….to outperform traditional investments without taking on unnecessary, unpredictable risk” and to have a “safety first policy.”
On August 20, 2021, the Securities and Exchange Commission reportedly charged Deeproot Funds LLC and its principal/president along with Policy Services Inc., with defrauding nearly 300 investors out of $58 million.
Deeproot and its principal allegedly convinced investors, many of whom were retirees, to cash out annuities and individual retirement accounts they held with other investment companies and invest in two Deeproot funds, Deeproot 575 Fund, LLC and the Deeproot Growth Runs Deep Fund, LLC. according to the SEC’s complaint.
Its principal, who is also a registered investment advisor, and Deeproot allegedly defrauded the two investment funds and nearly 300 people who invested roughly $58 million in the funds, according to the SEC.
The SEC says that the advisor purportedly paid himself roughly $1.6 million from 2016 through 2020 using investors’ funds allegedly “to pay hundreds of personal expenses, including his daughter’s private school tuition, vacations with his family, his second wedding, his second divorce, his third wedding, jewelry for both his second and third wives (including engagement rings and wedding bands for both wives), other lifestyle spending for and by his family, and to buy a condominium in Kauai, Hawaii.”
The SEC further alleges that the Defendants raised more than $58 million from investors in the Deeproot 575 Fund and the Deeproot Growth Runs Deep Fund, yet they “spent less than $10 million to purchase life insurance policies for the Funds.”
Deeproot 575 Fund, based in San Antonio, Texas, reportedly filed a form D to raise capital from investors in 2019. The total offering amount sold was purportedly $32,190,186 and the sales fees were estimated at close to 7% of the total offering amount sold.
Potential Securities Claims to Recover Financial Losses
The White Law Group is investigating the liability that brokerage firms and sales agents may have for improperly selling Deeproot 575 Fund and other Deeproot funds to investors.
Broker dealers are required to perform adequate due diligence on all investment recommendations. They must ensure that each investment recommendation that is made is suitable for the investor in light of the investor’s age, risk tolerance, net worth, financial needs, and investment experience.
Unfortunately, sometimes financial advisors may misrepresent the basic features of the products – usually focusing on the income potential and tax benefits while downplaying the risks. If a broker or brokerage firm makes an unsuitable investment recommendation or fails to adequately disclose the risks associated with an investment, they may be found liable for investment losses.
For more information on the firm’s investigation, please see:
To determine whether you may be able to recover investment losses incurred as a result of your purchase of Deeproot 575 Fund or another private placement investment, please contact The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. The firm represents investors throughout the country in claims against their brokerage firm.
For more information on the firm and its representation of investors, visit www.WhiteSecuritiesLaw.com.
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