The former chief compliance officer of Yellowstone Partners, a now-defunct registered investment advisory firm, has been barred from practice for his role in an overbilling scheme that defrauded clients out of $11.8 million.
By suspecting fraud but deliberately avoiding learning the truth, Cameron High became a participant in the scheme, the Securities and Exchange Commission said.
High was an investment adviser representative for Yellowstone from July 2006 to March 2017 and was a registered representative associated with broker-dealers registered with the SEC from April 2006 to October 2017. On March 14, 2018, he pled guilty to wire fraud resulting from allegations he “knowingly defrauded investors and obtained money or property by means of materially false or fraudulent pretenses, representations, or promises, with the intent to deceive or cheat, and that he used wire communication to carry out or attempt to carry out an essential part of the scheme,” the SEC’s administrative proceeding stated.
“High agreed to the count and admitted that he became aware of a high probability that the CEO had devised a scheme or plan to defraud clients, but deliberately avoided learning the truth, and therefore, knowingly participated in the fraudulent scheme,” the SEC said.
The Commission’s complaint alleged, in connection with the sale of securities, from at least 2008 through June 30, 2017, Yellowstone, through its then-CEO David Hansen, “intentionally employed devices, schemes, and artifices to defraud clients by engaging in fraudulent, deceptive, and manipulative transactions and practices,” the administrative proceeding stated.
High and Hansen participated in the scheme to defraud by intentionally or recklessly overbilling more than 120 clients in an amount of $11.8 million and misrepresenting the nature of overbillings to clients. “Overbillings were taken from unsuspecting clients to generate additional revenue to cover Yellowstone’s operating expenses and to support Hansen’s lavish lifestyle,” according to a complaint filed in the U.S. District Court for the District of Ohio on Sept. 30, 2019.
The complaint further alleged Yellowstone, through High, also failed to maintain client agreements, as required by Commission rules. The complaint alleged High did not directly receive funds from the fraudulent scheme.
The SEC has barred High from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. He has also been barred from participating in any offering of a penny stock.
In November 2018, the Department of Justice indicted Hansen on tax fraud and wire fraud for the overbilling scheme.