Securities Newsroom

SEC Charges Amerindo Investment Advisors And Its Co-Founders And Principals With Fraud And Misappropriation

The Securities and Exchange Commission yesterday filed securities fraud charges against Amerindo Investment Advisors, Inc., Alberto William Vilar and Gary Alan Tanaka, Amerindo’s co-founders and principals, for misappropriating at least $5 million from an Amerindo client. Amerindo is a registered investment adviser with offices in San Francisco, New York and London. The Commission’s complaint seeks disgorgement of the defendants’ ill-gotten gains, civil penalties, and permanent injunctions from future violations of the antifraud provisions of the federal securities laws. In addition, upon emergency motion by the Commission, the court granted a preliminary injunction against Amerindo prohibiting it from future violations of the federal securities laws and appointed a temporary monitor over Amerindo.

The Commission’s complaint alleges that in approximately June 2002, Vilar solicited an Amerindo client and close personal friend to invest $5 million in the Amerindo Venture Fund LP, a limited partnership that was purportedly being organized to qualify and be operated as a Small Business Investment Company (SBIC). Shortly after the investor wired $5 million to a brokerage account as Amerindo had instructed, Tanaka began to transfer a portion of the investor’s funds to other accounts Vilar and Amerindo controlled.

Specifically, within several days of the investor’s investment, Tanaka signed letters of authorization directing the transfer of at least $1.65 million to other accounts, including $1 million to a personal checking account held in Vilar’s name, and $650,000 to a bank account Amerindo controlled. Vilar then used the funds he received from the investor to pay personal expenses, including transferring $540,000 to Washington and Jefferson College, his alma mater to which he had pledged large sums, and $177,000 to the American Academy in Berlin, an institution to which Vilar had donated money in the past.

Subsequently, the investor inquired about the status of her SBIC investment after Amerindo failed to make promised quarterly payments. Vilar informed her that, although the Small Business Administration (SBA) had approved Amerindo’s application for an SBIC license, Amerindo had to re-apply for a license because of personnel turnover at the SBA. Further, Vilar stated that, while this process was ongoing, Amerindo had to deposit funds for the SBA, and that her $5 million investment constituted part of the $10 million Amerindo was required to escrow to initiate the fund. Vilar’s statements were false. The SBA never approved a license for the Amerindo Venture Fund LP (or any other Amerindo affiliated fund). Further, Amerindo, the purported adviser to the fund, never deposited any funds or otherwise escrowed $10 million for the SBA.

Linda Chatman Thomsen, the Director of the Commission’s Division of Enforcement, said, “This case demonstrates the Commission has zero tolerance for fraud by a fiduciary.”

Mark K. Schonfeld, the Director of the Commission’s Northeast Regional Office, said, “In light of recent events, we have sought to have someone appointed to monitor and review the activities of Amerindo, respond to client concerns, and ensure the safety of Amerindo client funds.”

The Commission’s complaint alleges that Amerindo violated the antifraud provisions of the Securities Act of 1933, Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. The complaint further alleges that Vilar and Tanaka violated the antifraud provisions of the Securities Act and Exchange Act, and aided and abetted Amerindo’s violations of the Advisers Act. On May 26, 2005, the United States Attorney’s Office for the Southern District of New York arrested Vilar and Tanaka