SEC Charges Against Downing Investment Partners, Downing Digital Healthcare Group

Downing Investment PartnersPublicly available records provided by the Securities and Exchange Commission and accessed on June 24, 2019 indicate that the SEC has filed charges in connection with an allegedly fraudulent “healthcare investment scheme.” The charges were filed in the Southern District of New York against David Wagner, Mark Lawrence, Downing Partners, Downing Investment Partners, and Downing Digital Healthcare Group. Fitapelli Kurta is interested in hearing from investors who have complaints regarding investments made through those entities.

According to the SEC’s complaint, the defendants raised more than $8 million from 30 or more investors in connection with healthcare investment offerings. Some of these investors were also “hired as purported employees” of some of the funds offered in the alleged scheme. As part of the offerings, the alleged scheme’s orchestrators “purported to acquire, manage, and resell companies that provided healthcare services and related technologies for the funds’ investment portfolios.” Mr. Wagner, an unregistered investment adviser based in Greenwich, Rhode Island, allegedly held control of the funds in question as well as their bank accounts; he and Mr. Lawrence, who is based in Watercolor, Florida, allegedly solicited investments in the funds, attracting new investors by “falsely inflat[ing] the available cash reserve of the funds,” which included both Downing Investment Partners and Downing Digital Healthcare Group. They also allegedly made false representations regarding the revenue generated by those funds’ portfolio companies. According to the SEC’s allegations, Mr. Wagner went so far as to “secretly” negotiate an arrangement under which Downing Digital Healthcare Group would pay him management fees, as well as fees to an entity under his control, and that the entity ultimately paid more than $540,000 in such undisclosed payments.

The SEC alleges that Mr. Wagner defrauded his investors “by prioritizing paying his salary and management fees” rather than the funds’ purported goals. The SEC noted that the private placement memorandum for Downing Digital Healthcare Group specifically represented that the fund’s manager would not be due compensation of that manner. The SEC alleges further that the healthcare funds were experiencing significant financial issues, including difficulty meeting “even basic payroll obligations,” counter to the defendants’ representations that the healthcare funds “had sufficient liquidity to provide stable employment.” Moreover, according to the SEC, Mr. Wagner directed the funds to pay existing investors using funds paid by new investors. The end result of the above conduct, according to the SEC, led to “millions of dollars in losses to investors.” In connection with these allegations, the defendants have been charged under the Securities Exchange Act and the Investment Advisers Act. The charges remain pending.

If you or someone you know has a complaint regarding investments in Downing Partners, Downing Investment Partners, and Downing Digital Healthcare Group, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be able to recover lost funds. Fitapelli Kurta accepts all cases on contingency: we only get paid if and when you collect money. You may have a limited window to file your complaint, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.