Wilmington Financial Advisor Charged With Bilking Clients of $1.1 Million

The legal problems are continuing to mount for a Wilmington-based financial advisor.

Earlier today (March 18), the Securities and Exchange Commission announced Gregg D. Caplitz, who been charged with stealing money from clients who were given the false impression they were investing in a hedge fund.

In 2012, Caplitz was charged with filing multiple false tax returns and was later charged with conspiracy and impeding the IRS.

In a new complaint unsealed today in federal court in Boston, the SEC alleges Caplitz and Insight Onsite Strategic Management of Wilmington, raised at least $1.1 million from clients that was used for purposes other than investing in the hedge fund they claimed to manage.

According to the complaint, investor money was merely transferred to the firm’s chief investment officer, Rosalind Herman of Las Vegas, and other members of her family who spent it on personal expenses.

regg caplitz

had reported in SEC filings that it has $100 million in assets under management, however the supposed hedge fund actually has zero assets.

According to a press release issued by the Securities and Exchange Commission, U.S. District Judge Mark L. Wolf granted the SEC’s request for an emergency court order to freeze the assets of Caplitz and his firm as well as others who received investor money. The SEC will be looking to retrieve investor money from all of them.

“Caplitz and his firm conjured up a hedge fund to lure longtime clients into investing substantial amounts of money that became nothing more than a slush fund to pay bills for others,” said Julie M. Riewe, Deputy Chief of the SEC Enforcement Division’s Asset Management Unit.

According to the SEC’s complaint, Caplitz’s scheme began around 2009.  While soliciting funds, Caplitz convinced one client and his wife to invest $275,000 in the hedge fund that Caplitz claimed would generate them about $1,000 per month in returns.

Caplitz also solicited a 20-year client who after considering his sales pitch decided not to invest in the hedge fund because she considered it too risky of an investment for someone her age. But Caplitz apparently took action to obtain funds from the client’s IRA account and wire thousands of dollars to an Insight Onsite Strategic Management bank account.  The client was not aware of the transfers and did not authorize them. 

The SEC alleges that instead of using investor funds to purchase shares in a hedge fund or to manage or develop a hedge fund, Caplitz transferred control of client money to Rosalind Herman, his friend who works at the firm.  Investor funds also were transferred to her sons Brad and Brian Herman, daughter-in-law Charlene Herman, and a company called The Knew Finance Experts.  The Hermans, who all live in Las Vegas, own that company.  The Hermans used investor money to pay legal bills and other personal expenses at gas stations, drugstores, and restaurants. 

The SEC alleges that as part of his scheme, Caplitz obtained funds from a real estate investment trust (REIT) by falsely representing that a hedge fund he operated was interested in making an investment in that trust.  The public, non-traded REIT gave $135,000 to Caplitz so he could conduct due diligence on the REIT as a precursor to making a $5 million investment that never materialized.