Garrett W. Moretz

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26061 / July 29, 2024

Securities and Exchange Commission v. Garrett W. Moretz, Civil Action No. 5:24-cv-00171 (W.D. N.C. July 29, 2024.)

SEC Charges Broker with Fraud Related to Sale of GWG L Bonds

On July 29, 2024, the Securities and Exchange Commission filed a complaint in Federal Court in Charlotte alleging Garrett Moretz fraudulently sold high-risk debt securities known as L Bonds, which were issued by GWG Holdings, Inc. ("GWG").

The SEC's complaint alleges that Defendant Moretz misrepresented L Bonds to investors as "guaranteed" from at least September 2019 until about August 2020. Moretz's conduct during that period continued a long standing pattern of misrepresenting L Bonds as guaranteed to investors and potential investors. For example, the SEC's complaint alleges that Moretz's emails to a customer made multiple references to L Bonds being guaranteed such as:

"Are you looking for a great guaranteed rate of return and payout on your money?"

"We have fully guaranteed investment/income options available in 2-, 3-, 5-, and 7-year terms."

"These are guaranteed to pay the specified rate of return MONTHLY for the predetermined period after which you get your full investment returned."

"These are all great opportunities for folks that want a steady rate of return and guaranteed payout."

The complaint further alleges that Moretz telephoned another customer recommending the purchase L Bonds stating that L Bonds would provide a better return than she was getting on other investments, that they were "safe" and "guaranteed," and the customer would get her money back. The complaint also alleges that Moretz told another customer that L Bonds were 100% safe and 100% guaranteed with regard to both the principal and interest and there was zero risk in an investment in L Bonds.

The complaint alleges that Moretz knew or was reckless in not knowing that investors were not guaranteed to receive interest payments on L Bonds or the return of principal invested in L Bonds. The SEC's complaint alleges that Moretz the Hedonova Fund and Hedonova Advisors violated Section 17(a) of the Exchange Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

The investigation of this matter was conducted by Jonathan Epstein and supervised by CJ Kerstetter, of the SEC's Chicago Regional Office. The litigation will be led by Christopher White and assisted by John Birkenheier.