The U.S. Securities and Exchange Commission has filed charges of fraud and other violations against one of Nevada’s sports betting mutual funds and its founder.
The action, filed in Nevada District Court against Bettor Investments and principal Matt Stuart, came more than a year after several of the fund’s investors went public with complaints that Stuart was not responding to their requests to return their money.
Stuart registered Bettor Investments in 2015, shortly after a Nevada law was enacted authorizing businesses to aggregate and place sports wagers on behalf of investors, with investors sharing in the wins and losses.
According to the Las Vegas Review-Journal, Stuart raised $145,500 from roughly 70 investors in more than 20 states.
He later shut down Bettor Investments, blaming regulatory problems surrounding CG Technology, which has been repeatedly fined in Nevada for wrongdoing and was one of the few bookmakers in the state willing to partner with the mutual funds.
The Review-Journal, citing the SEC, said Stuart refunded about $70,000 to approximately 15 investors and converted the rest into 12-month promissory notes with “guaranteed” 14 percent rates of return. When investors tried to contact Stuart once the notes came due, he shut down the fund’s website and stopped responding to phone calls and emails, they told the R-J.
The SEC complaint says the notes were not within the scope of allowable conduct under Nevada law and that the notes constituted “material misrepresentations and omissions” regarding the losses that Stuart and Bettor Investments suffered, in addition to Stuart’s compensation for managing the fund.
The two are charged with violating federal regulations prohibiting the sale of unregistered securities and the failure to file a registration statement for the offering of securities. They are also charged with violating the regulations’ anti-fraud provisions, which criminalize the unauthorized interstate sale of securities.
Bettor Investments isn’t the first fund targeted by the SEC. Contrarian Investments and Nevada Sports Investment Group both have reached settlements with the commission over various complaints.
