The Securities and Exchange Commission yesterday smacked brokerage CEO Tommy Belesis, who appeared in Oliver Stone’s “Wall Street 2,” with fraud charges.
The watchdog filed an administrative action against Belesis and George Jarkesy, a Houston radio host, for allegedly deceiving investors of two hedge funds Jarkesy managed in order to enrich themselves at the investors’ expense.
The action, which is heard before an SEC law judge rather than a federal judge, also named Belesis’ brokerage firm John Thomas Financial.
“We intend to vigorously fight the charges and we fully expect this will not affect the business because these are only allegations,” said Belesis’ lawyer, Ira Sorkin.
“Mr. Jarkesy vehemently denies the SEC’s allegations and intends to mount a vigorous defense,” Jarkesy’s lawyer, Jason Lewis, said.
In the action, the SEC said the two men falsely claimed that Jarkesy’s $30 million hedge funds were “wholly independent” from Belesis and JTF, which trained actor Shia Lebeouf on the ways of Wall Street for Stone’s movie.
The claim of independence was “a sham designed to enrich Belesis at the expense of the funds,” the SEC said.
In reality, Belesis called the shots on many of the funds’ investment decisions, and Jarkesy funneled millions in “bloated” fees from the funds to JTF, the SEC said.
The SEC showed Jarkesy’s deference and allegiance to Belesis through e-mails it obtained in the case.
“We will never retreat we will never surrender and we will always try to get you as much [in fees] as possible, Everytime [sic] without exception!” Jarkesy told Belesis in one e-mail.
Belesis also feigned independence from Jarkesy to shield himself from accusations of wrongdoing, the SEC said.
Among the alleged problems with the funds was that Jarkesy told investors they had been audited by KPMG, but this was a lie, the SEC said.