The allegations read: On june 21, 2023, the u.s. District court for the northern district of georgia atlanta division issued a complaint. The sec alleges as follows: defendant michael wayne williams, acting through two entities that he largely owned and controlled - defendants highguard capital, lp and guardian opportunity management, lp (collectively, "defendants'') - orchestrated various securities frauds. First, between february 2016 and july 2017, defendants williams and highguard fraudulently offered and sold to multiple investors over $1.8 million of securities interests in guardian management, which they described to investors as the manager of a new private fund being launched called the guardian opportunity fund, lp (the "fund"). Defendants represented that the investors' funds in guardian management would be used to manage guardian management and launch and grow the fund. In fact, defendants - unbeknownst to some or all of the guardian management investors - wrongfully diverted the investor proceeds to repay investors in three prior funds which williams was closing and from which he had lost assets through unprofitable trading. Second, while acting as investment managers of the fund between approximately march 2016 to october 2022, williams and guardian management falsified the fund's claimed performance by underreporting the fund's assets in calculating the fund's returns - thereby creating an artificially higher rate of return on the assets under management - and provided such information to current and prospective fund investors in soliciting their investment into the fund. Using false performance numbers, williams solicited and obtained investments of at least $16 million in the fund, including investments in the fund as recently as october 2022. Third, beginning in or about february 2021, williams and highguard fraudulently offered and sold approximately $1 million in securities interests in guardian management and an affiliated entity to a mississippi woman. Like the earlier investors in guardian management, defendants told this new investor that they would use her investment to manage guardian management and grow the fund. Again, however, defendants diverted the investor money to pay off several earlier guardian management investors who were complaining about a lack of a return on their 2016-2017 investments. Moreover, while representing to this new investor that guardian management would be a profitable investment for her, defendants failed to disclose that the fund's largest investor, who had invested over ninety percent of the fund's total assets, had given notice of its intent to withdraw all of its fund assets, thereby significantly reducing any management or performance fees that guardian management and this investor could potentially earn. Defendants engaged in acts or practices that violated section 17(a) of the securities act of 1933 and section 10(b) of the securities exchange act of 1934 and rule 10b-5 thereunder. Unless restrained and enjoined by this court, defendants will continue to engage in acts and practices that violate these provisions. Defendants williams and guardian management also engaged in acts or practices that violated section 206(4) of the investment advisers act of 1940 and rule 206(4)-8 thereunder. Unless restrained and enjoined by this court, defendants williams and guardian management will continue to engage in acts and practices that violate these provisions.
