The Securities and Exchange Commission (SEC) has filed charges against former investment advisor Andrew Jacobus and two firms he controlled, alleging violations of securities laws in connection with a scheme that defrauded approximately 40 investors out of over $17 million. The case highlights critical compliance and due diligence considerations for wealth advisors and RIAs serving international or niche client bases.
According to the SEC’s complaint, the alleged victims, primarily Venezuelan nationals including elderly individuals and Catholic dioceses, entrusted their funds to Jacobus between 2015 and 2024. These investors believed they were participating in securities and initial public offering (IPO) stock investments. Jacobus, 62, of Fort Lauderdale, Fla., allegedly raised $39.7 million by selling limited partnership interests in a fund he controlled. The fund purportedly invested in pre-IPO companies, but Jacobus is accused of misleading clients about the investments’ nature and fabricating account statements to conceal significant losses.
The SEC contends that Jacobus perpetuated his scheme through Kronus Financial, a holding company, and Finser International Corporation, a registered investment advisory (RIA) firm. To maintain the illusion of legitimacy, Jacobus allegedly made nearly $8 million in Ponzi-like payments to early investors. This strategy kept the scheme afloat, masking ongoing fraud from newer investors.
Attempts to reach Jacobus for comment were unsuccessful. A phone number listed in SEC filings for Finser is no longer operational, and Florida business records show Kronus dissolved in September 2024. Court filings do not indicate whether Jacobus has retained legal counsel.
The SEC’s allegations reveal this is not Jacobus’ first encounter with regulatory scrutiny. In 2020, he settled charges with the SEC over fee misrepresentations and misstatements about asset custody related to the same fund at the center of the current case. Without admitting or denying the earlier allegations, Jacobus agreed to a censure and a $70,000 penalty. These past infractions underscore the importance of robust compliance programs for advisors managing complex funds.
In a parallel legal development, Florida prosecutors have charged Jacobus with first-degree grand theft. He has pleaded not guilty to the charges.
Jacobus’ ties to the Venezuelan community date back to 2001, when he launched a currency exchange in Venezuela. In 2010, he founded his advisory firm, which initially served clients from his currency exchange business. His focus on a specific demographic—Venezuelan nationals seeking investment opportunities—allowed him to build trust within the community. However, the SEC’s complaint alleges that Jacobus exploited this trust to promote what he called the Corfiser SIMI Fund.
Jacobus marketed the Corfiser SIMI Fund as a vehicle offering early access to IPO investments. A private-placement memorandum detailed a 2% management fee and a 20% performance fee structure. Additionally, Jacobus allegedly promised some clients a 12% annual return, claims that the SEC now says were patently false.
Instead of fulfilling these promises, the SEC alleges Jacobus deposited client funds into accounts he controlled personally or through his business entities. He is accused of misappropriating $17.3 million for personal expenses, including mortgage payments, property taxes, luxury vehicles, and travel. Notably, the SEC asserts that Jacobus defrauded Catholic dioceses and clergy members in Venezuela, stealing $3.2 million from these religious organizations.
One particularly egregious example cited by the SEC involved an August 2021 account statement provided to a client. The fabricated statement showed a balance of $3.8 million in cash and securities, but the actual account held no funds, securities, or trading activity during that period. Such fraudulent reporting illustrates the lengths Jacobus allegedly went to in order to conceal his misconduct.
For advisors and RIAs, this case underscores the critical importance of thorough due diligence and compliance monitoring. When dealing with clients from specific cultural or national groups, advisors must take extra care to ensure that their practices are transparent and adhere to fiduciary standards. Moreover, the allegations against Jacobus serve as a stark reminder of the damage that can result from inadequate oversight within advisory firms.
The SEC’s enforcement action seeks a permanent injunction against Jacobus and his companies, disgorgement of misappropriated funds, and financial penalties. While the resolution of this case remains pending, it offers several key takeaways for advisors managing client relationships and complex investment products:
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Transparency and Accurate Reporting: Advisors must provide clients with clear, truthful, and timely information regarding their investments. Fabricated account statements, like those alleged in this case, not only violate regulatory requirements but also erode trust.
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Robust Internal Controls: Firms should implement rigorous compliance frameworks to monitor transactions, account statements, and investment activities. Independent audits can help identify and address irregularities before they escalate.
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Cultural Competency and Ethical Practices: Serving niche communities, such as Venezuelan nationals, requires sensitivity to their unique needs and concerns. Advisors should prioritize ethical practices to maintain trust and uphold their fiduciary responsibilities.
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Regulatory Compliance: Past infractions, like those in Jacobus’ 2020 settlement, can signal potential risks. Advisors with prior disciplinary actions should take proactive steps to demonstrate ongoing compliance and mitigate regulatory scrutiny.
For RIAs, this case also highlights the need to maintain a clear distinction between personal and business finances. Misusing client funds for personal expenses—as Jacobus allegedly did—constitutes a severe breach of trust and fiduciary duty, with devastating consequences for both clients and the advisor’s professional standing.
As the SEC continues its efforts to address fraudulent activities in the investment advisory space, wealth managers and RIAs should use cases like this as an opportunity to reassess their own practices. By fostering transparency, maintaining ethical standards, and adhering to robust compliance protocols, advisors can build enduring trust with their clients and safeguard their professional reputations.
