Community Corner

UPDATED: Winnetka Man Allegedly Spent Veteran's Investments on 3-D Adult Film Company

Winnetka resident Clayton Cohn also allegedly spent money invested by veterans on a $10,000 per month mansion in L.A. and on investments in a hair extension company.

A hedge fund owned by Winnetka resident Clayton Cohn, 26, a U.S. Marine Corps veteran, was shut down by the Securities and Exchange Commission on Thursday. Cohn allegedly participated in hedge fund fraud that targeted current and former military service members, an article by Business Insider states.

According to the SEC, Cohn raised around $1.78 million from 24 investors, while lying about his fund's performance and his trading success. The SEC report states that Cohn has been lying to his investors by "fabricating investor account statements," "forging brokerage statements" and by "using new investor money to pay redemptions to earlier investors."

The court documents filed by the SEC in the United States District Court say that Cohn spent the investors' money living the 'high life', including investing in a 3-D adult film production company, a t-shirt design company and a hair extensions sales company.

According to the documents, Cohn also spent an estimated $400,000 on personal items, including a $10,000 per month mansion in Los Angeles, a luxury sports car, gambling and racking up "extravagant tabs" at high-end nightclubs. 

An article by Reuters states that Cohn found his investors through the Veterans Financial Education Network, an organization created to help veterans manage their money. Cohn allegedly spent less than half of what he raised on his fund's equity and equity tradiing options. 

When investors requested redemptions, Cohn allegedly refused to honor the requests, stating that liquidity problems delayed redemptions when in reality, according to the SEC report, Cohn and the fund have no money. The report states that Cohn is continuing to search for new investors, despite losing all of the money. 

Cohn's LinkedIn profile states that he spent four years in the U.S. Marine Corps as an infantry machine gunner, serving two combat tours in Iraq. The profile states that he was awarded the purple heart and was honorably discharged in 2009 with the rank of sergeant.

According to his LinkedIn profile, Cohn also owns a non-profit organization, Playdoh Financial Education Inc., to teach individuals of all ages the "importance of financial literacy," with a special division to teach veterans and service members about finance, business and entrepreneurship. 

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