The Securities and Exchange Commission (“SEC”) instituted a
cease-and-desist proceeding against John Thomas Capital Management Group,
George Jarkesy Jr., John Thomas Financial (“JTF”), and Anastasios “Tommy”
Belesis. The case centers on Jarkesy,
who is accused of fraudulent conduct while managing two hedge funds – John
Thomas Bridge and Opportunity Fund LP I, and John Thomas Bridge and Opportunity
Fund LP II. In addition to fraudulent
actions in connection with these two funds, Jarkesy is accused of funneling
Fund money into JTF and Belesis in the form of bloated funds to the
broker-dealer.
The Funds, which had assets over $30 million at their peak,
were also known as Patriot Bridge and Opportunity Fund LP I and LP II, and the
advisers were known as Patriot28 LLC.
Belesis is accused of demanding and obtaining de facto
control over investment decisions at the Funds, despite representations Jarkesy
was responsible for all investment decisions.
It is alleged this sham was perpetrated to insulate Belesis from
liability. Further, it is alleged
Jarkesy and John Thomas Capital Management breached their fiduciary duty by
diverting a large amount of fees to JTF and Belesis from the Funds via
borrowing companies.
In a particularly egregious email sent from Jarkesy to
Belesis after Belesis had berated Jarkesy for not delivering enough fees,
Jarkesy responded, “We will never retreat we will never surrender and we will
always try to get you as much [fees] as possible, Everytime [sic] without
exception!”
The SEC Order, which can be viewed here, alleges Jarkesy
incorrectly valued the Funds’ holdings on multiple occasions and in multiple
different assets. Further, it alleges
John Thomas Capital Management’s sales material contained multiple misrepresentations
designed to make the Funds appear legitimate.
If you were the victim of this allegedly fraudulent scheme,
please contact the securities fraud attorneys at Block & Landsman to
discuss your matter.
