The SEC charged unregistered adviser, Backswing Ventures GP LLC and its principal, Kyle Asman, for allegedly defrauding a private fund client through payment of excessive management fees, and further defrauding investors and prospective investors in the fund through misrepresentations and other deceptive acts. According to the SEC order, Backswing hoped to raise a $50 million fund, but only raised $3.8 in capital commitments. The management fee calculation described in the fund LPA differed from the calculation described in the PPM. Regardless of the calculation methodology, the SEC alleged that Backswing paid itself 23% of the fund's capital contributions in the first year of operations, or about 7 time more than it was due under fund governing documents. The fund administrator booked the excess fees as "prepaid management fees" and instructed Backswing not to transfer further fees from the fund until the prepaid fees were depleted, which was ignored. The SEC further alleged that Backswing (i) failed to engage an independent auditor and provide investors with required audited financial statements; (ii) failed to provide investors with unaudited fund financial statements at required intervals; and (iii) misrepresented fund subscription information (claiming that it had raised $48 million), fund investments (claiming investments in an AI portfolio company that were never made), audit status (claiming an audit had been conducted when only a proposal had been provided), and Asman's credentials (touting investment banking roles at firms where he had only interned). This litigated fraud case provides a cautionary lesson for new fund launches to ensure that they have sufficient financing available and controls in place in the event the fund does not raise its expected capital.