South Carolina Investment Fund Manager Sentenced to 63 Months for $20 Million Securities Fraud Scheme

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South Carolina Investment Fund Manager Sentenced to 63 Months for $20 Million Securities Fraud Scheme

A South Carolina investment fund manager has been sentenced to 63 months in prison for his role in a scheme to fraudulently obtain over $20 million from investors, Acting U.S. Attorney Rachael A. Honig announced.

George Heckler, 65, of Charleston, South Carolina, previously pleaded guilty by videoconference to an information charging him with one count of securities fraud. Heckler was sentenced to 63 months in prison by U.S. District Judge Madeline Cox Arleo in Newark federal court.

According to documents filed in this case and statements made in court, Heckler managed multiple investment funds, including Conestoga Partner Holdings (Conestoga), Cassatt Short Term Trading Fund LP (Cassatt), CV Special Opportunity Fund LP (CVSO), and TA1 LLC (TA1). From 2014 to 2018, Heckler misrepresented to investors that he would invest their funds in particular trading strategies. Instead, he diverted their funds out of Cassatt and TA1 for purposes inconsistent with the trading strategies, including to pay out millions of dollars to other investors.

Heckler also used investors’ funds to cover investment losses suffered by other funds under his management and/or control. He solicited investments from Victim-1, claiming the investments would be invested in Cassatt, which employed a “first loss” trading strategy intended to protect investors from losses. However, as of December 2013, Cassatt no longer had a brokerage account that was necessary to employ the represented trading strategy.

Despite Cassatt no longer having a brokerage account, in 2014, Heckler represented to Victim-1 that Cassatt was still engaged in a first loss trading strategy and solicited Victim-1’s investment in Cassatt. In September 2014, Victim-1 invested approximately $9.1 million in Cassatt, relying on Heckler’s representation that Victim-1’s money would be invested consistent with Cassatt’s first loss trading strategy.

Heckler took approximately $1 million in fees and distributions from the fraudulently obtained investments for his personal use. In addition to the prison term, Judge Arleo sentenced Heckler to three years of supervised release and ordered forfeiture of $19.25 million. The U.S. Securities and Exchange Commission has filed a civil complaint against Heckler based on the allegations underlying the securities fraud charge.