According to the US Securities and Exchange Commission (SEC), Anastasios “Tommy” Belesis, who is the founder of John Thomas Financial Inc., along with Houston Radio Host George Jarkesy, defrauded investors into two different hedge funds. Belesis and Jarkesy told investors that the funds were independent from the brokerage and then steered high fees to the John Thomas Financial Inc. SEC announced of this through an official statement. The administrative proceedings against both Jarkesy and Belasis have already started, including the respective firms. According to SEC, Belasis and Jarkesy may face punishments including financial penalties and disgorgement.
Belesis and Jarkesy worked together to build two hedge funds in 2007 and 2009 and those peaked at $30 million under management as they told investors that they would invest in bridge loans, microcap stocks and life insurance policies. The value of investments in disclosures used to be inflated by Jarkesy. He even hired stock promoters for boosting the price of the shares. On the other hand, Belesis took actions that violated the basic principles of hedge funds.
One of the Directors of SEC, Andrew M. Calamari stated that Jarkesy disregarded some of the basic standards being held by the fund managers. Not only that Jarkesy falsified valuations and deceived the investors about holdings’ value, he even bent backwards to enrich Belesis at the expense of the fund.
David Pitts of Argot Partners LLC, who works as the spokesperson of the brokerage chief, stated that Belesis intends to defend himself against all these allegations made by the SEC. On the other hand, lawyer of Jarkesy at Locke Lord LLP, Jason Lewis, stated that his client denies all these allegations and will do his best to get acquitted.
Belesis even pushed Jarkesy for more fees in a belligerent and profane manner. Belesis even tried to make the funds invest in certain companies where his firm had interest. According to SEC, they even have access to emails where some of the transaction particulars have been mentioned by both Jarkesy and Belesis.
There were a total of 120 investors for the hedge funds named as John Thomas Bridge and Opportunity Fund LP I and II, as data released by the SEC. The inflated valuations for the holdings on each monthly statement were listed by the funds. These used to form the basis for calculation of the fees.