SEC Names Recidivist, Claimed Country Music Fund Raiser, In Fraud Order

The Commission directed the institution of an administrative proceeding charging recidivist Stanley Jonathan Fortenberry, an unregistered fund adviser, with fraud in connection with the operation of a fund supposedly tied to a country music talent. In the Matter of Stanley Jonathan Fortenberry, Adm. Proc. File No. 3-15858 (April 28, 2014).

Mr. Fortenberry is the general partner of Premier Investment Fund L.P., a pooled investment vehicle. He had the exclusive authority to solicit investment, communicate with investors and make marketing decisions for the fund. He has also been ordered by the Pennsylvania Securities Commission and the Texas State Securities Board to cease and desist from selling unregistered securities.

In March 2010 Mr. Fortenberry contacted a prominent manager of country music talent. He offered to raise money for the Manager’s new entertainment and social media Company. It was to fund a country music themed Social Media Website.

Although the Manager did not enter into any arrangement with Mr. Fortenberry, subsequently the adviser created offering materials that he claimed were tied to a business plan for Country Music Website. The business plan was used to solicit investors. Those investors were told that Mr. Fortenberry could invest in the entertainment and country music industries and arrange meetings with the Manager.

The business plan and other offering materials contained a number of materially false and misleading statements. Those included claims that Website would be grossing $30 million per month; that an investment now would return 12% per annum; that principal and interest would be paid back in three years while investors maintained their equity; and that each investor would be paid $35,000 per month for life.

The offering materials also made misrepresentations regarding the books and records and regarding his background. Specifically, those papers claimed that there would be a full set of financial statements prepared in accord with GAAP. In fact there were virtually no records. The papers failed to disclose either consent decree issued against Mr. Fortenberry.

Similarly, Mr. Fortenberry misrepresented his compensation. While investors were told that he would have an equity stake in Premier and a share of profits, they were not told that he would also charge management fees. Nor were they told that he would, in essence, loot the fund for his personal benefit. Indeed, Mr. Fortenberry took at least $141,500 in undisclosed management fees, personal expenses and cash withdrawals. None of those transactions were disclosed to investors. And, now the money is largely gone.

The Order alleges willful violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Advisers Act Sections 206(1), 206(2) and 206(4). The proceeding will be set for hearing.

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