The state succeeded in getting a permanent injunction against Lake Township investment adviser and money manager Geoffrey Nehrenz and his businesses, accused of losing nearly $7.9 million from 19 investors.
A receiver was appointed over the assets in the case, as well.
The Ohio Department of Commerce alleges Nehrenz withdrew investor funds far in excess of what he was authorized to take and used the money for personal and business use. Of the nearly $7.9 million invested between May 2009 and September 2012, only $13,213.37 remained as of a month ago, the state said.
One investor had entrusted nearly $2.9 million with Nehrenz, according to court documents.
The state alleged Nehrenz and his businesses made false representations and engaged in fraud.
Stark County Common Pleas Judge John Haas issued the preliminary and permanent injunction late Thursday. It prohibits Nehrenz and his businesses, fund manager Keystone Capital Management LLC and investment fund Keystone Active Trader LLC, from:
• Selling or offering to sell any securities in violation of state law.
• Selling, offering to sell, issuing or distributing securities without prior court approval.
• Engaging in any deceptive, fraudulent or manipulative act.
• Destroying or altering records.
Nehrenz could not be reached for comment.
He will be required to pay back any money taken without authorization, according to the state. The receiver, Canton lawyer James Kandel, will determine how much money Nehrenz must repay.
According to court filings, Nehrenz was permitted to charge a 2 percent annual management fee and was entitled to 25 percent of gross profits under the agreement with investors. Based on the $7,894,867.66 the state said was invested with Nehrenz, a 2 percent fee would have generated $157,897 a year.
The state said Nehrenz used investor funds to pay more than $18,000 to Congress Lake Country Club; more than $36,000 to buy a car; $1,250 to Coral Sands Resort in Hilton Head, S.C.; more than $48,000 for health-care coverage; and more than $500,000 in withdrawals and transfers to a joint account he held with his wife.
Court documents said investors were told their money would be invested largely in short-term domestic equity instruments Keystone Active Trader managed. While documents said no more than 10 percent of investor funds would be invested in illiquid securities, as much as 35 percent was placed in such products, the state said.
The state also says Nehrenz and his businesses misrepresented the kinds of investments that investors were buying.
The state said its investigation showed Nehrenz withdrew money more frequently than permitted under the private offering documents and that “the amounts taken by Nehrenz far exceed the amount he was entitled to receive for his management fee and share of gross profits.”
Court documents say that in an investigatory hearing, Nehrenz testified he did not disclose to investors that withdrawals from Keystone Active Trader were “loans” made to Keystone Capital Management. Those loans were never repaid, the state said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.