(Sept. 17) – Thomas Caufield was not a character in J.D. Salinger’s Catcher in the Rye, but the U.S. Securities and Exchange Commission says he has been up to no good nonetheless.
The SEC’s Fort Worth Regional Office charged Caufield, a 30-year veteran of the securities industry, with offering fraud Monday related to his Texas-based investment education franchise.
The SEC claims that Caufield, through his DAT Capital Advisors operation, provided false and misleading information to dozens of people between 2013 and 2017 to get them to invest $6.8 million in high-yield promissory notes by promising investors significant returns generated from the revenues of what he claimed was a profitable franchise.
“Caufield represented that he would use investor funds to acquire and operate a franchise that offered investment education programs,” according to the SEC’s 11-page complaint filed in federal court in Dallas. “Instead, he used a large portion of the funds for other purposes, including paying returns to earlier investors and paying past-due franchise expenses.”
The SEC claims that Caufield misled investors about the franchise’s bleak financial condition, used new investor money to repay earlier investors and falsely claimed that investors’ notes were secured by assets.
“Investors should view the terms safe, secure, and high returns – when used together in an offering – with great skepticism,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “They are often used as bait for the unsuspecting.”
Court records show that Caufield consented to the SEC’s petition for final judgment without legally admitting guilt. The judgment orders Caulfield to disgorge $614,815.14 plus prejudgment interest of $126,032.11. He also agreed to a $160,000 civil penalty.
The SEC team from Fort Worth included Robert C. Hannan, Melvin Warren, Christopher A. Davis. The case was supervised by Scott F. Mascianica and Eric Werner.
FYI: The Texas Lawbook knows that Holden’s last name was spelled “Caulfield.”