Investment adviser barred, penalized $590,000
Seattle investment adviser Dennis Daugs Jr. will pay more than $590,000 in penalties and will be barred from the field for five years to settle Securities and Exchange Commission charges that he spent upward of $8 million of his clients’ money for personal use.
Seattle Times business reporter
A Seattle investment adviser will pay more than $590,000 in penalties and will be barred from the field for five years to settle Securities and Exchange Commission (SEC) charges that he spent upward of $8 million of his clients’ money for personal use.
Dennis Daugs Jr., owner and portfolio manager of Lakeside Capital Management, agreed to the penalties to settle an SEC suit alleging that from 2008 to 2012 he took personal loans from his customers without informing them.
Daugs did not admit to any wrongdoing. He could not be reached for comment.
In January 2008, according to the SEC, Daugs took out a $2.15 million personal loan from an elderly client’s portfolio to purchase a ski-vacation home for himself. He then took $950,000 from the same client in May 2009 to buy a rare 1955 Mercedes Gullwing.
Daugs made regular interest payments on these loans, but didn’t tell the client about the loans until February 2010. When his client found out, she fired him and he paid her back the loan, but with disproportionately low interest rates.
From 2009 to 2012 Daugs also misused around $5.2 million from a real-estate fund that he managed, according to SEC documents.
The documents claim Daugs made cash payments with this real-estate fund’s money to the elderly woman client, and to other disgruntled clients. He only repaid this money to the fund when the diversions were discovered by an outside auditor.
Daugs and Lakeside agreed to pay $268,014 to the elderly client and $72,138 to the real-estate fund to compensate for lost interest on their investments, as well as a $250,000 fine to the SEC. The SEC banned Daugs from working in securities for five years and ordered Lakeside to wind down operations and not to take on any new clients.
Brandon Brown: 206-464-2164 or firstname.lastname@example.org