The SEC alleges that Michael F. Anderson and his company, The End of the Rainbow Partners, L.L.C. (Rainbow Partners), raised approximately $5.3 million from investors who were told that Anderson was a retired, successful hedge fund manager who intended to day trade their funds using a proprietary algorithm. Claiming he no longer needed income and instead wanted to help friends and charitable causes, Mr. Anderson falsely told investors that he would fund his wife's charitable organization for abused women and children, The End of the Rainbow Foundation, Inc. (Rainbow Foundation), with up to 20% of his trading profits, and divide the remaining profits among investors.According to the SEC's complaint filed last week in the U.S., between March 2014 and February 2017 Rainbow Partners and Anderson misappropriated more than $2.3 million from investors by, among other things, transferring investor funds to Mr. Anderson's wife, Carolyn Anderson, her purported charity, the Rainbow Foundation, a second company owned by Ms. Anderson, Seaoma Consulting Company (Seaoma), and another hedge fund managed by Mr. Anderson, Bighorn Wealth Fund, L.P. (Bighorn). The SEC alleges that the misappropriated funds were used to pay the Andersons' personal expenses, including tax debts, mortgage payments, private school tuition, life insurance premiums, credit card bills, and car payments. According to the complaint, the Rainbow Foundation was a sham entity that never conducted any legitimate business.In addition to misappropriating investor funds, the SEC alleges that Rainbow Partners and Mr. Anderson incurred substantial trading losses of nearly $600,000 while falsely assuring investors that trading was profitable. To hide these losses, the SEC alleges that Rainbow Partners, through Mr. Anderson, generated and distributed fabricated account statements to investors reflecting non-existent profits and used approximately $1.9 million in investor money to repay other investors in a Ponzi-like scheme. In a sworn affidavit drafted before his death, Anderson admitted to much of the misconduct alleged in the SEC's complaint.
Aleksandr Burman, an individual with no medical license, established eight medical clinics in Brooklyn (the "Related Clinics"), which operated between 2007 and 2013. For each clinic, Aleksandr Burman hired a doctor, one of whom was VAID, as the nominal owner of the clinic, since New York State law requires that such clinics be owned by a medical professional. In fact, however, VAID was hired by Aleksandr Burman simply to pose as the owner of one of the clinics, and to sign medical charts falsely stating that he had examined a number of Paid Patients, and to provide prescriptions and referrals for medically unnecessary supplies.