Peter Kohli


October 11, 2016

Type of alert:

SEC Complaint  

On September 28, 2016, the Securities Exchange Commission (SEC), through the United States District Court of the Eastern District of Pennsylvania, publicized Litigation Release No. 23658 announcing charges and a jury trial demand against Peter Kohli, DMS Advisors, Inc. (DMS Advisors), and Marshad Capital Group, Inc. (Marshad) for alleged violations of securities industry rules.

According to the SEC Complaint, Peter Kohli of Pottstown, Pennsylvania fraudulently raised more than $3.2 million from at least 120 investors from 2012 through 2015. The complaint alleges that, among other things, Kohli filed false mutual fund registration statements with the SEC, misappropriated investor funds, and made false and misleading statements when selling securities in a company controlled by Kohli.

According to the Complaint, Kohli owned DMS Funds and the company’s investment advisor, DMS Advisors, Inc. (formerly known as Family Heritage Financial, Inc.) as well as Marshad, who owned DMS Advisors. The Complaint alleges that “Kohli filed registration statements with the SEC that falsely overstated DMS Funds’ sophistication and ignored the key risk that DMS Advisors and Kohli would be unable to pay the funds’ expenses, sold Marshad warrants, falsely telling investors that Marshad had taken steps toward an initial public offering, stole money meant to be invested in the mutual funds, and used it instead to pay fund expenses and, as the funds neared collapse, lied to investors and sold Marshad promissory notes with no reasonable expectation that the purchasers could be repaid.” The complaint also alleges that Kohli specifically solicited individuals 50 years old and up, with a minimum income of $25,000 per year, by mailing them invitations to his free dinner investment seminars.

As a result of this alleged conduct, Kohli, DMS Advisors, and Marshad violated Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, Sections 206(1), 206(2), 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder, and Section 34(b) of the Investment Company Act of 1940. A judge for the U.S. District Court for the Eastern District of Pennsylvania granted the SEC’s request for a temporary restraining order and asset freeze against the defendants. A court hearing was scheduled for October 7, 2016, on the SEC’s motion for a preliminary injunction.

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