SEC Files Complaint Against Lamesa Man - KCBD NewsChannel 11 Lubbock

1/20/09

SEC Files Complaint Against Lamesa Man

Retirement plans for more than two dozen people on the South Plains could be in jeopardy, after federal investigators filed a complaint against a Lamesa man. The Securities and Exchange Commission filed the complaint Tuesday in Lubbock Federal Court against 43-year-old Rod Stringer.

Investigators say he operated an ongoing, fraudulent investment scheme and misappropriated millions of dollars from investors. The complaint says Stringer used the money to support an extremely lavish lifestyle. Investigators also say he ran a Ponzi scheme to pay returns to old investors with funds from new investors. 

According to investigators stringer ran a fraudulent hedge fund called "RCS Hedge Fund". The SEC says neither Stringer nor the fund has ever been registered with them. Stringer claimed it was worth $45-million with 31 investors, many of whom are elderly. He claimed his strategy generated annual returns as high as 61% and total returns in excess of 600%. His alleged fee for these phenomenal returns was an 8%-10% commission on the gains.

Authorities say it appears Stringer started the scheme in 2001, but the expedited investigation by the FBI and the SEC focused on his activities since January 2007. Investigators say Springer's claims are completely bogus and in truth, since January of 2007 his transactions resulted in substantial losses. From 2007 to the time the complaint was filed, the investigation revealed Stringer raised at least $8.5-million from approximately 12 to 15 investors, but only $1.5-million actually made its way into three securities brokerage accounts in Springer's name.

Investigators say they haven't located the remaining funds, but say it's clear that Stringer used substantial amounts of money to finance a horse racing partnership, buy a luxury boat, build a swimming pool at his office, buy several pieces of jewelry, pay off mortgages on at least two homes, and purchase several expensive cars. They also say he used $2.4-million of client funds to pay distributions and alleged profits to other investors.

The complaint asks the court to stop Stringer and any other participants from violating SEC rules. They also ask the court to make him repay funds with interest and pay civil penalties. NewsChannel 11 tried to speak with Stringer Tuesday afternoon, but he did not return our call.

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