A 29-year-old investment advisor has pleaded guilty to engaging in a wire fraud conspiracy to steal over $1 million from investors.

A 29-year-old investment advisor has pleaded guilty to engaging in a wire
fraud conspiracy to steal over $1 million from investors.

Frederick Douglas Scott, chief executive of ACI Capital Group in Manhattan, NY, waived
indictment and pleaded guilty to defrauding his clients, as well as lying to
Securities and Exchange Commission officials who were conducting a regulatory
examination of his firm.

According to the US Attorney’s Office for the Eastern District of New York, Scott
faces up to 20 years’ imprisonment on the fraud charge and five years’
imprisonment on the false statement charge. Scott also faces a fine equal
to double the investors’ losses, mandatory restitution of $1,338,770 to the
victims, and forfeiture of assets.  

“Today, Fredrick Douglas Scott admitted that he used ACI Capital to steal
his clients’ investments and fund his own lavish lifestyle. Rather than the
historic figure he presented to the media, Scott stands revealed as a common
thief, who lied his way into his investors’ pockets and then continued his web
of lies when confronted by the SEC,” said US attorney Loretta Lynch

According to documents filed in the case, ACI was founded by Scott in 2009
and purported to be an investment banking and advisory firm with an office at 477 Madison Avenue
in New York.
ACI registered as an investment advisor with the SEC in July 2011 and,
according to its most recent regulatory filing, claimed to manage $3.7 billion
in assets.

Scott worked with intermediaries or finders to locate potential victims,
whom he promised a high rate of return for providing short-term financing to
businesses purportedly associated with ACI, the US Attorney said. But once
victims wired money to ACI, Scott stole the funds for his personal use.     

Consequently, Scott now also faces charges from the SEC, which on Friday
said he had defrauded investors and falsely claimed his assets under management
were $3.7 billion to bolster his credibility when offering too-good-to-be-true
investment opportunities.

In the SEC filings, the regulator said that Scott paid no returns to
investors and used their money to fund such personal expenses as his children’s
private school tuition, air travel and hotels, department store purchases, and
several thousand dollars in dental bills.