The SEC has sued a Georgia advisor for allegedly misappropriating more than $1.7 million from at least three clients, two of whom were relatives of his, and using the proceeds for personal expenses, including buying a house.
In a civil complaint, the SEC accuses Eric Hollifield, 49, of Winder, Ga., of six counts of fraud and asks for a jury trial, disgorgement with prejudgment interest of all ill-gotten gains and a civil money penalty.
Hollifield’s attorney, Craig Kuglar of Kuglar Law, Atlanta, could not be reached by press time.
According to the SEC’s complaint, Hollifield was a co-owner of Hamilton Investment Counsel (HIC), a registered investment advisor based in Dacula, Ga., between Oct. 2016 and Sept. 2021. He was also a registered representative of LPL Financial, which provided brokerage services to HIC, beginning in 2016. In the fall of 2019, the firm reported about $196 million in assets under management from 402 advisory clients.
In August 2019, Hollifield convinced a relative who was also an HIC advisory client to acquire an area business, Century Warehouse, which provided shipping logistics and warehousing services, and following the purchase Hollifield ran the company, the SEC said. Between October 2019 and October 2020, Hollifield advised HIC clients to invest about $5.35 million in Century through 19 transactions without disclosing his position at the company, the regulator said.
Of the $5.35 million, Hollifield wired at least $1 million to his own accounts and used the money for personal expenses, the SEC claimed.
In August 2020, Hollifield bought a $1.7 million home with 37 acres of land in his hometown, however, virtually all of the money for the purchases came from diverting funds in several schemes from his clients, two of whom were relatives, the SEC said. Those schemes included moving $425,000 from relative’s client account to Century Warehouse and siphoning off $200,000, the SEC said. He also transferred $1.24 million from another relative’s client account directly to the real estate closing agent, the complaint said. In addition, Hollifield raised funds by convincing a non-related investor to extend Century Warehouse a $300,000 promissary note that was later increased to $500,000, the SEC said.
In Auust 2021, when Hollifield became aware of the SEC’s investigation, he repaid the non-related investor $200,000 of the $500,000 allegedly owed, the SEC said. At that time, Hollifield’s HIC co-owner, Jeffrey Kirkpatrick, also became aware of the SEC’s investigation.
According to BrokerCheck, HIC fired Hollifield in September 2021, followed by LPL Financial that same month. LPL also terminated its relationship with HIC. Georgia regulators barred him from financial services at the end of September, and Finra barred him in October.
Separate administrative and cease-and-desist proceedings were filed by the SEC against HIC and Kirkpatrick. The SEC said the cases were settled with HIC and Kirkpatrick agreeing to pay penalties of $150,000 and $15,000, respectively.
Prior to co-founding HIC, Hollifield was a dually registered broker and investment advisor for Merrill Lynch from 1998 to 2003, at H&R Block from 2003 to 2008, and at Sterne Agee from 2008 to 2016, with no disclosures. However, BrokerCheck did register a $179,444 tax lien in May 2019.
HIC’s latest Form ADV filing reported no client or assets under management. Kirkpatrick is now a registered advisor at Transitus Wealth Partners, headquartered in Wilmington, De. The firm’s latest ADV claimed $232 million in AUM among 331 individual and high-net-worth clients.