The SEC charged unregistered investment adviser, John Sterling Myers, Sterling Capital, LLC and Sterling Capital Management, LLC who raised money for a private fund from friends, family, and other investors with misappropriating investor money, falsifying investor account statements, and engaging in other misconduct. The SEC's complaint alleges that Myers began operating this so-called “premier” and “exclusive investment pool” in 2022 and raised approximately $4 million from approximately 28 investors over several years. The complaint further alleges that unbeknownst to investors, Myers perpetually drained the fund through unsuccessful trading and personal spending, losing over $3.6 million of investors’ money. Myers allegedly sent investors fabricated quarterly account statements depicting accumulated net gains and positive performance beyond that of the S&P 500, and concealing the fund’s actual results by failing to issue tax forms to investors, as required by fund offering documents, to inform them of their distributive share of the fund’s losses. Instead, according to the complaint, Myers claimed all trading losses on his own personal tax returns without making any disclosure to fund investors. Myers allegedly misappropriated at least $1.8 million by diverting fund assets to his personal financial accounts, through which he engaged in further unsuccessful trading and paid for various personal expenses. This egregious fraud case highlights for need for investors to conduct adequate due diligence on the registration status and background, trading activity, and performance claims of private fund managers, even those they know personally, and reinforces the importance of accurate disclosures regarding fund losses.