Two Milwaukee-area investment advisors who owned and operated Greenpoint Tactical Income Fund, an organization charged with defrauding more than 100 investors, have been ordered to repay $27.5 million.
A Sept. 5 order issued by U.S. District Judge William Conley of the U.S. District Court for the Western District of Wisconsin also permanently barred local businessmen Christopher Nohl and Michael Hull from running any other securities business in the future.
The men were originally charged by the Securities and Exchange Commission in September 2019 and found liable for securities fraud in 2022 by a jury.
Hull and Nohl were the managing members of Madison-based Greenpoint Tactical Income Fund LLC, a private investment fund they controlled through two other entities: Greenpoint Asset Management II and Chrysalis Financial.
Hull is an Oconomowoc resident while Nohl is a Milwaukee resident, according to the SEC’s complaint.
Both men also controlled GP Rare Earth Trading Account LLC, a fund that specifically invested in gems and rare Earth minerals. Nohl spent $21.9 million to buy 3,000 gems and minerals for the fund’s collection.
From April 2014 to June 2019, both men raised approximately $52.7 million from 129 investors in 10 states, including Wisconsin.
The SEC’s complaint alleges that Greenpoint Tactical told investors the firm had annual returns of up to 65%. Hull and Nohl generated these alleged returns by inflating the value of a private company that the fund invested in. The men also inflated the value of physical gems and minerals in the fund’s portfolio.
“Nohl repeatedly interfered in the appraisals of the gems and minerals owned by the fund in order to obtain and report higher values and thereby obtain higher management fees,” according to the SEC’s complaint. “Nohl’s interference includes purchasing minerals from an appraiser contemporaneously with the appraiser appraising the fund’s gems and minerals; leaning on appraisers to assign higher appraised values; rejecting appraisals he deemed too low and instead using older, higher appraised values; and cherry-picking higher appraised values.”
The SEC said Hull and Nohl improperly charged the fund excessive management fees of more than $13 million based on the inflated valuations. Since 2017, the complaint alleges, the fund paid the men and their business entities more than $5.9 million in fees while telling many investors that the fund had no liquidity to meet redemption requests.
In total, outside investors paid Greenpoint Tactical approximately $62 million for shares of the company while the investment firm returned just $9 million.
As part of the $27.5 million judgement, Hull and Nohl will repay investors $16 million and $11.5 million to the U.S. Treasury.
