Investment adviser charged with defrauding $1.5M from clients

The 29-year-old owner of Chicago financial firms defrauded at least 37 investors out of more than $1.5 million, according to federal charges filed Thursday.

Clayton Andrew Cohn of Chicago has been charged with one count of wire fraud and faces up to 20 years in prison, restitution, and a fine of up to $250,000, according to a statement from the U.S. Attorney’s office.

Between 2010 and 2013, Cohn controlled Chicago-based Marketaction Inc., Marketaction Advisors LLC, and the hedge fund Marketaction Capital Management LLC, prosecutors said.

Despite the fact that his firms had “very little investment activity,” Cohn told potential investors his trading strategies were “thriving” and he had stakes in “numerous private equity investments,” prosecutors said. He made minimal investments and instead, “misappropriated a large amount of his clients’ funds for his own personal benefit.”

At least 37 investors sustained losses of more than $1.5 million, because Cohn distributed account statements that falsely stated the value of investor accounts, prosecutors said. He also told prospective clients that return on investments would be “simple” and easy,” and “available on a monthly basis.”

Cohn also prepared and filed false and misleading reports with the SEC about his hedge fund, including how it was subject to annual audits, prosecutors said. The SEC filed a civil lawsuit against Cohn and Marketaction Advisors LLC in August 2013.

Cohn is scheduled for arraignment May 26 at 10 a.m. in federal court in Chicago.