Coatesville investment adviser accused of fraud

/Home/Charles Ponzi and Modern Day Ponzi Schemes/Ponzi Schemes Reported in 2009

Coatesville investment adviser accused of fraud

By Harold Brubakerhttp://madofffraud.boomja.com/images/item_panel/icon.png
Inquirer Staff Writer

The Securities and Exchange Commission yesterday accused a Coatesville investment adviser of a $23 million fraud that allegedly ensnared dozens of wealthy residents of Chester County's fabled horse country.

In a civil filing, regulators said Donald Anthony Walker Young, who is known as Tony Young, used money from new investors to pay previous investors and "stole some of the money to purchase a vacation home in Palm Beach, Fla."

They also alleged that Young, 38, who lives near Coatesville, used investor money to "pay personal expenses related to horse ownership and racing, construction, boats, limousines, chartered aircraft and other luxuries," the SEC said.

It was not clear yesterday how the case was uncovered, but it became the buzz of Chester County horse circles after the Federal Bureau of Investigation conducted a raid on Young's office in Kennett Square on Friday.

The allegations against Young came three months after Philadelphia's Main Line was rocked by the collapse of Broomall investment manager Joseph S. Forte's Ponzi scheme that cost investors an estimated $34 million.

Last year's stock market wipeout has resulted in the unraveling of many investment frauds across the country, the biggest being the $50 billion Bernard L. Madoff case.

Young, who flashed wealth and frequented the cocktail circuit to win clients, could not be located yesterday. Calls to his house in West Marlborough Township and to his house in West Palm Beach, which he bought in 2006, allegedly with the help of $1.9 million in investors' money, were not returned.

His attorney, Paul Huey-Burns, a former SEC enforcement official now with Dechert L.L.P.'s Washington office, did not return a call seeking comment.

Young operated the alleged Ponzi scheme through an investment partnership Acorn II L.P., which he established in 2001 to invest in publicly traded securities, authorities said. The SEC alleged in its 22-page complaint that the fraud began in mid-2005 and continued until recently.

On Friday, John R. Padova, U.S. District Judge for the Eastern District of Pennsylvania, issued a temporary restraining order, freezing assets and imposing other emergency relief for investors.

Cuyler H. Walker, a lawyer with Pepper Hamilton L.L.P. of Philadelphia, represents 10 or 12 of the fund's 40 investors. "Our clients are very concerned based on the allegations that the SEC has made against Tony Young," Walker said. "We are cooperating fully."

Named by the SEC as recipients of funds from an illegal scheme were an investment fund, Oak Grove Partner's L.P.; Young's wife, Neely Young; and W.B. Dixon Stroud Jr., whose family founded the small chain of Landhope Farm convenience stores.

The SEC alleged that Stroud, whose family wealth had its origins in Milliken & Co., a large southern textile manufacturer on his mother's side of the family, received $7 million in investor funds from Acorn last year.

Stroud did not return a call to his residence in West Grove.

The SEC said Acorn II contains about $3 million, though Young, who is a registered investment adviser, assured his 40 investors in February that the fund contained $23 million.