SEC Charges RIA with Pro Athlete Niche for Ripping Off Clients
The Securities and Exchange Commission has charged a Lenexa, Kansas-based investment advisor with defrauding his clients with undisclosed fees and misleading them about a high-risk investment strategy.
Elstun, 52, padded those fees by applying the advisory fee to non-advisory assets, including bank account balances, equity in homes and other real estate, and the value of vehicles, the SEC said. After the agency began investigating, Elstun produced forged account agreements purportedly authorizing the excessive fees.
From March 2013 to the end of 2018, Elstun also breached his fiduciary duty by investing the majority of his advisory clients–including several senior citizens–in risky daily leveraged and inverse ETFs and held the investments for long periods of time, costing his clients millions in losses, the SEC said.
The investments, which he improperly pitched to conservative clients, included UVXY, which had aimed to correspond to double the performance of the S&P 500 short-term futures index, and the ProShares Short VIX Short-Term Futures ETF, according to the SEC’s complaint.
Elstun could not immediately be reached for comment.
CFM, which Elstun launched in 2006 after taking over a partner’s practice, had $125 million in client assets, according to the SEC. Elstun, who had played college basketball, recruited athletes as advisory clients and also worked with dozens of other wealthy individuals as well as “a few” charities and endowments.
Elstun started his career as a broker at G.R. Phelps & Co. in 1993 and worked as an independent broker until 2012 when he became a fee-only advisor, according to BrokerCheck and SEC licensing records.
Since 2019, he has been registered with Frontier Wealth Management, a Kansas City, Missouri, RIA founded in 2007 that has almost $3 billion in assets, according to its most recent ADV filing in June last year.