A former senior partner at Apollo Management L.P. says via his lawyer that he will fight charges that he improperly billed clients for high-end purchases totaling $290,000.
A former senior partner at a major private equity firm is being charged by SEC officials for “defrauding his fund clients” by billing them for personal expenditures such as vacations, hair salon appointments, designer clothes, and high-end electronics that totaled approximately $290,000.
The accused Mohammed Ali Rashid, a former senior partner at New York-based private equity firm Apollo Management L.P., will be fighting the charges, according to his lawyer, William Burck, a partner with the firm Quinn Emanuel Urquhart & Sullivan. Rashid worked for Apollo from August 2000 to February 2014 and achieved the title of senior partner.
“Mr. Rashid strongly disputes the SEC’s stale and spurious claims. He very much looks forward to full vindication in court,” Burck says in a statement sent to FTF News.
“Rashid provided investment advice to at least five private equity funds managed by Apollo affiliates,” according to the SEC compliant. “As investment advisers, Apollo and Rashid owed fiduciary duties to the client funds that they advised. At all times, they were required to act in their clients’ best interests and owed those clients a duty of undivided loyalty and utmost good faith.”
The SEC is alleging that Rashid “falsely claimed that certain individuals accompanied him to dinners to make it appear various personal expenses had a business purpose, and he doctored a receipt in an effort to justify his purchase of a $3,500 suit for his father as a business expense,” according to the SEC.
“As alleged in our complaint, despite earning millions of dollars, Rashid used client money to fund his lifestyle and personal expenses, including family vacations, designer clothing, and spa services. Rashid knew what he was doing was wrong because he took active steps to conceal his misconduct,” says Anthony Kelly, co-chief of the SEC Enforcement Division’s Asset Management Unit, in a prepared statement.
The SEC in its complaint says that “despite being caught by the firm and told to stop on two occasions in 2010 and 2012, Rashid continued to expense personal items to clients into 2013. After he was confronted about his expenses for a third time, Rashid admitted that he charged approximately $220,000 in personal expenses. A forensic accountant then uncovered additional personal expenses that Rashid improperly charged to clients.” SEC officials allege that Rashid’s actions violated sections of the Investment Advisers Act of 1940.
A spokesperson for Apollo says that the firm uncovered the alleged misconduct and alerted authorities.
“The SEC’s lawsuit, filed earlier today [Oct. 25], is based on misconduct that Apollo discovered, stopped and promptly reported to the SEC more than four years ago and which was publicly disclosed more than a year ago,” according to the statement from Apollo. “This misconduct is inconsistent with the high standards that Apollo requires of its employees. Apollo has ensured that any affected funds or portfolio companies were reimbursed for any potentially improper charges. Apollo has continued to enhance its internal policies and procedures with respect to employee expenses and has cooperated fully with the SEC throughout this investigation.”
The SEC investigation was conducted by Donna Norman of the Asset Management Unit and Duane Thompson, and the litigation will be led by Thompson, SEC officials say. The case will be supervised by Jan Folena and Corey Schuster.
The text of the full complaint is available here.
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