Friday, June 4, 2010

Tennessee Financial Advisor Accused Of $5.5 Million Ponzi Scheme

Aaron Donald Vallett, 32, of Brentwood, Tennessee, has been accused by the Securities and Exchange Commission of operating a Ponzi-type investment fraud scheme through his financial advisory firm, A.D. Vallett & Co. LLC, that bilked investors out of as much as $5.5 million. According to the SEC complaint, from September 2008 and April 2010, Vallett raised approximately $5.5 million from 19 investors through three unregistered offerings. Further, Vallett promised investors that they would receive "secured notes" for their investments with his firm, which were to be made in "various investments" including real estate. Instead, the SEC claims that Vallett spent a "substantial" portion of the investment funds on paying earlier investors returns and for personal expenses. The SEC obtained a temporary court order freezing the Vallett's assets. The firm's web site claims to be the "exclusive investment services provider" for the Nashville Predators professional hockey team. The SEC complaint alleges Vallett violated the Securities Act of 1933 and the Investment Advisors Act of 1940. No criminal charges have yet been filed. We note that FINRA, the Financial Industry Regulatory Authority, indicates multiple sanctions against Vallett, including a four suspension in 2008 and fines for various violations and infractions. He was also "permitted to resign" from a prior employer, Cambridge Way, Inc., for "misappropriation of proprietary material" and "violation of acknowledged company policy and code of ethics."

Read the story here, here, here and here.

Read the SEC complaint here.

Clearly a little due diligence would have revealed these prior bad acts for this character and no one should have invested with him.

1 comment:

Anonymous said...

As a former employee at A.D. Vallett & Co., I can tell you that these charges do not come as a shock to many of us.

Aaron always had a smugness and arrogance about him. He often bragged of his wealth and his powerful status in the community.

The only victims here are those who trusted in this man to protect their money. He instead chose to spend freely on things that he believed would elevate his image.

Some people choose to work hard to make their way. Others choose to take short-cuts and screw others to get ahead. Mr. Vallett certainly is the latter.

I also hope that the SEC and FINRA strongly consider pursuing criminal charges. I doubt his elevated sense of self-worth, his arrogant attitude, or his complete and utter lack of regard for others will serve him well in prison.