SEC v. Garrett W. Moretz, No. 5:24-cv-00171, Western District of North Carolina (July 29, 2024) — Complaint

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
NO. 5:24-cv-00171

UNITED STATES SECURITIES AND
EXCHANGE COMMISSION,

Plaintiff,

v.

GARRETT W. MORETZ,

Defendant.

              COMPLAINT
              (Jury Demanded)

Plaintiff, United States Securities and Exchange Commission (“SEC” or the “Commission”),
files this Complaint against Defendant Garrett W. Moretz as follows:
NATURE OF THE ACTION
1. Moretz is a registered representative and investment adviser representative of
Broker A.  Moretz deceived multiple retail investors by making repeated misrepresentations to them
regarding high-risk debt securities known as L Bonds, which were issued by GWG Holdings, Inc.
(“GWG”).
2. Moretz, in both electronic mail messages and oral communications, repeatedly
misrepresented L Bonds to investors as “guaranteed.”   Moretz knew the L Bonds he offered and
sold to investors were not guaranteed, and he knew they were not guaranteed at the time he
represented them as such to investors.
3. Since at least 2017, Moretz misrepresented L Bonds to investors and potential
investors as “guaranteed.”   From at least September 2019 until in or about August 2020, Moretz
misrepresented L Bonds as “guaranteed” to four customers who subsequently purchased L Bonds.

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4. Through his conduct, Moretz violated, and unless restrained will continue to violate,
Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and Section 10(b)
of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. §   240.10b-5].
5. The SEC seeks a permanent injunction, disgorgement and prejudgment interest, and
civil penalties against Moretz based on his violations of Section 17(a) of the Securities Act and
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
JURISDICTION AND VENUE

6. The Commission brings this action to restrain Moretz from engaging in the
transactions, acts, practices and courses of business alleged in this Complaint, and transactions,
acts, practices and courses of business of similar purport and object, for disgorgement of illegally
obtained funds, civil money penalties, and other equitable relief.
7. This Court has jurisdiction over this action pursuant to Sections 20(b)-(d) and 22(a)
of the Securities Act [15 U.S.C. §§ 77t(b)-(d) and 77v(a)],  and Sections 21(d)-(e) and 27(a) of the
Exchange Act [15 U.S.C. §§ 78u(d)-(e) and 78aa].
8. Venue lies in this district pursuant to Section 22(a) of the Securities Act [ 15 U.S.C. §
77v(a)] and Section 27 of the Exchange Act [ 15 U.S.C. §   78aa],  because transactions, acts, practices
and courses of business constituting violations of the federal securities laws occurred, and Defendant
transacts business, within the Western District of North Carolina.
9. Defendant, directly and indirectly, made use of the means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange in connection
with the transactions, acts, practices and courses of business alleged in this complaint.

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10. There is a reasonable likelihood that Defendant will, unless enjoined, continue to
engage in the transactions, acts, practices and courses of business set forth in this complaint, and
transactions, acts, practices and courses of business of similar purport and object.
DEFENDANT
11. Garrett W. Moretz (“Moretz”), age 53, lives in Mooresville, North Carolina and is
employed by Moretz Wealth Management, LLC, which is also located in Mooresville, North
Carolina.    Moretz has been a registered representative and investment adviser representative of
Broker A since approximately June 2017.
RELATED ENTITY
12. Broker A, headquartered in Rochester, New York, is registered with the
Commission as a broker-dealer and investment adviser. Through its registered representatives and
investment adviser representatives, including Moretz, Broker A sells securities to retail investors.  At
all relevant times, L Bonds were one of the securities offered for sale by Broker A.
FACTS
A. GWG and the L Bonds
13. GWG was a financial services company.  Prior to 2018, GWG’s business model
involved purchasing life insurance policies from consumers who no longer wanted or needed them.
GWG continued to pay the premiums and collected the policy benefits upon the insured’s death.
As the result of a series of transactions in 2018 and 2019, GWG stopped acquiring life insurance
policies and transitioned its business model to focus on providing liquidity to a broader range of
alternative assets.
14. GWG had a history of net losses and had never generated sufficient cash flows to
fund its operations.  As such, GWG depended on financing, primarily debt financing, including the
sale of L Bonds to the public, to fund its operations.

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15. L Bonds were corporate bonds issued by GWG and sold to retail investors through a
network of broker-dealers, including Broker A.  As of December 31, 2019, GWG had
approximately $1.3 billion in L Bonds outstanding.  The credit risk of L Bonds was not rated by any
independent rating agency.
16. For the year ended December 31, 2019, GWG posted a net loss from operations of
$79.6 million and a negative operating cash flow of $142.8 million.
17. GWG’s largest tangible asset was its portfolio of life insurance policies, which had a
recorded fair value of $796 million as of December 31, 2019.  But L Bond holders’ claims to
GWG’s life insurance assets were subordinated to a senior credit facility, which had a direct
security interest in most of the life insurance policies.
18. As of December 31, 2019, GWG’s largest asset was goodwill, which constituted
approximately 65% of GWG’s assets.  Goodwill is an intangible asset that cannot be used to pay
down debt.  Eliminating goodwill, GWG’s liabilities were well in excess of its assets as of
December 31, 2019.
19. During the relevant time, GWG offered L Bonds pursuant to prospectuses dated
December 1, 2017 and June 3, 2020.  Both prospectuses were supplemented multiple times.  The
supplements each stated that they should be read in conjunction with the prospectus, and that the
information in the supplements was qualified by reference to the prospectus.  (The December 1,
2017 and June 3, 2020 prospectuses, as well as each supplement to those prospectuses, are
collectively referred to as the “Prospectuses.”)
20. GWG filed all of the Prospectuses with the Commission.  All of the Prospectuses
were publicly available at no charge through the Commission’s EDGAR system and could be
accessed by Moretz at any time.  GWG also provided the Prospectuses to broker-dealer and
investment adviser firms that sold L Bonds, including Broker A.

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21. Both the December 1, 2017 and June 3, 2020 prospectuses stated: “ Investing in our
L Bonds may be considered speculative and involves a high degree of risk, including the risk of
losing your entire investment.”
22. Both the December 1, 2017 and June 3, 2020 prospectuses, further stated: “ L Bonds
are only suitable for persons with substantial financial resources and with no need for liquidity in
this investment.”
23. The Prospectuses disclosed that the same assets backing the L Bonds were pledged
as direct collateral securing GWG’s obligations under a senior credit facility.  As the December 1,
2017 and June 3, 2020 prospectuses both stated: “ [t] hese facts present the risk to investors that the
collateral security . . . granted for our obligations under the L Bonds may be insufficient to repay
the L Bonds when they become due.”
24. The Prospectuses disclosed that L Bond holders had no right to require GWG to
redeem any L Bond prior to its due date, except in the case of the holder’s death, bankruptcy, or
total permanent disability.  The Prospectuses disclosed that GWG, in its sole discretion, could allow
an L Bond holder to redeem an L Bond prior to maturity, less a 6% fee, but that GWG was not
required to do so.
25. Both the December 1, 2017 and June 3, 2020 prospectuses disclosed that GWG did
not intend to list L Bonds on any securities exchange during the offering period, nor did it expect a
secondary market in the L Bonds to develop.  They further stated: “As a result, you should not
expect to be able to resell your L Bonds regardless of how we perform.  Accordingly, an investment
in our L Bonds is not suitable for investors that require liquidity in advance of their L Bond’s
maturity date.”
26. In April 2021, GWG halted L Bond sales because it was unable to file its 2020 Form
10-K with the Commission.  GWG did not file its 2020 Form 10-K until November 5, 2021.  GWG

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resumed L Bond sales on December 1, 2021, but suspended them again on January 10, 2022.  From
January 15, 2022 onwards, GWG failed to make any interest or principal payments that were due on
outstanding L Bonds.  On April 20, 2022, GWG filed for Chapter 11 bankruptcy.
B. Defendant Moretz’s Sale of L Bonds
27. Moretz has worked at various investment advisers and broker-dealers for more than
20 years.  Moretz has been a registered representative and investment adviser representative of
Broker A since in or about June 2017.
28. At all relevant times, Moretz received commissions from Broker A for investments
he sold to his brokerage customers and a fee that was a percentage of assets under management for
his investment advisory clients.
29. Moretz, through Broker A, sold L Bonds to customers from 2017 until at least
December 2020.
30. During the time he was selling L Bonds, Moretz knew the risks of L Bonds included
the possibility investors would lose their entire investment.  Moretz considered L Bonds a
speculative investment because there was a risk an investor would lose 100% of their principal.
31. Moretz knew that at the time he was selling L Bonds the interest payments on L
Bonds were not guaranteed.
32. Moretz knew at the time he was selling L Bonds that the return of an investor’s
principal was not guaranteed.
33. Moretz knew that at the time he was selling L Bonds that they were not an
investment vehicle for preserving an investor’s funds.
a. Guarantees and Securities
34. The Financial Industry Regulatory Authority (“FINRA”) is a self-regulatory
organization for broker-dealers and is a registered securities association under Section 15A of the

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Exchange Act [15 U.S.C. § 78o-3].  Broker A is a member of FINRA, and its registered
representatives are required to follow rules promulgated by FINRA.
35. FINRA Rule 2150, titled “Improper Use of Customers’ Securities or Funds;
Prohibition Against Guarantees and Sharing in Accounts[,]” states that “No member or person
associated with a member shall guarantee a customer against loss in connection with any securities
transaction or in any securities account of such customer.”
36. Broker A’s    Written Supervisory Procedures similarly provide: “Exaggerated claims,
unwarranted superlatives or guarantees should never be used. FINRA Conduct Rule 2150 prohibits
any individual associated with [Broker A] from guaranteeing a customer against loss in connection
with ANY securities transaction or in ANY securities account of such customer.  This prohibition
against guarantees is not solely for securities transactions effected through [Broker A].”
37. Moretz knew he was prohibited from making guarantees related to securities, either
as to their return or against loss.  Moretz knew that restriction applied to Broker A customers and
potential customers for the offer or sale of securities, including L Bonds.
b. Broker A’s Email Policies and Procedures
38. Broker A’s    Written Supervisory Procedures require that, “All business email
communications of a [Broker A] registered representative must occur through their [Broker A]
email address.  This requirement applies to [Broker A] related business correspondences with
[Broker A] customers or prospective customers[.] ”
39. Moretz regularly used a non-Broker A email account to discuss securities business
with Broker A customers.

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c. Defendant Moretz’s Sales to Customer 1 and Customer 2
40. Moretz misrepresented L Bonds as guaranteed to a pair of investors, husband
(“Customer 1”) and wife (“Customer 2”), who purchased an aggregate of $154,500 in L Bonds
through Moretz between January 2020 and December 2020.
41. In or about September 2019, prior to any L Bond purchases by either Customer 1 or
Customer 2, Moretz sent Customer 1 an email describing an investment product for Customer 1 and
Customer 2 to consider. The investment Moretz described in the email was L Bonds.
42. Moretz’s email to Customer 1 asked: “Want to take some money out of the market
for preservation?”  In making that statement, Moretz represented that L Bonds were an investment
vehicle for preserving an investor’s assets.
43. Moretz’s email to Customer 1 made multiple references to L Bonds being
guaranteed:
a. “Are you looking for a great guaranteed rate of return and payout on your
money?”
b. “We have fully guaranteed investment/income options available in 2, 3, 5,
and 7 year terms.”
c. “These are guaranteed to pay the specified rate of return MONTHLY for the
predetermined period after which you get your full investment returned.”
d. “These are all great opportunities for folks that want a steady rate of return
and guaranteed payout.”
44. Moretz’s email to Customer 1 guaranteed the monthly rate of return and return of
principal for an L Bond investment.
45. Moretz sent the email to Customer 1 from a non-Broker A email account even
though it was a business communication to a customer or prospective customer regarding a security

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offered by Broker A, which Broker A’s Written Supervisory Procedures required be sent from
Moretz’s Broker A email address.  Moretz knew or was reckless in not knowing that if he had sent
the email through his Broker A email account, Broker A likely would not have approved the email
because it made guarantees regarding an investment.
46. The language in Moretz’s email to Customer 1 was consistent with conversations
Moretz had with Customer 1 and Customer 2 each time they purchased an L Bond.  During those
conversations, Moretz orally misrepresented to Customer 1 and Customer 2 that L Bonds’ principal,
interest, and rate of return were guaranteed.
47. Moretz failed to tell Customer 1 and Customer 2 that L Bonds were a speculative or
high-risk investment.  Whether L Bonds were a speculative and high-risk investment was an
important consideration for potential investors like Customer 1 and Customer 2.
48. The money Customer 1 and Customer 2 invested in L Bonds was money they could
not afford to lose; they had held it in a bank for approximately 20 years and intended to use it for
their children’s college education and other expenses.
49. Moretz’s misrepresentations of L Bonds as guaranteed were important to the
decision of potential customers, like Customer 1 and Customer 2, to invest in L Bonds.
50. When Moretz represented to Customer 1 and Customer 2 that L Bonds were
guaranteed, he 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.
51. When Moretz represented to Customer 1 and Customer 2 that L Bonds were a means
of preserving assets, he knew or was reckless in not knowing that his representations were false.
52. When Moretz represented to Customer 1 and Customer 2 that L Bonds’ principal,
interest, and rate of return were guaranteed, he knew or was reckless in not knowing that his
representations were false.

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53. Moretz knew that FINRA Rule 2150 prohibited him from making guarantees with
respect to securities.  Moretz also knew or was reckless in not knowing that his representation of L
Bonds as guaranteed in his September 2019 email violated FINRA Rule 2150.
54. Moretz knew that Broker A’s Written Supervisory Procedures prohibited him from
making guarantees with respect to securities.  Moretz also knew or was reckless in not knowing that
his representation of L Bonds as guaranteed in his September 2019 email violated Broker A’s
Written Supervisory Procedures.
55. After receiving Moretz’s email to Customer 1, and after Moretz told Customer 1 and
Customer 2 that L Bonds’ principal, interest, and rate of return were guaranteed, Customer 1 and
Customer 2 purchased three L Bonds totaling $99,500 in January 2020.
56. Customer 1 and Customer 2 purchased an additional $30,000 L Bond from Moretz in
May 2020 and another $25,000 L Bond in December 2020, bringing their aggregate L Bond
purchases from Moretz to $154,500.  Before both their May 2020 and December 2020 purchases,
Customer 1 and Customer 2 had additional conversations with Moretz, in which he reiterated his
misrepresentations that L Bonds were guaranteed.
57. Moretz received commission payments from Broker A as a result of all of the L
Bond purchases by Customer 1 and Customer 2.
d. Defendant Moretz’s Sale to Customer 3
58. Moretz misrepresented L Bonds as guaranteed to a customer (“Customer 3”) who
purchased a $45,000 L Bond from Moretz in or about August 2020.
59. Customer 3 first learned of L Bonds from a series of three emails Moretz sent her in
the summer and fall of 2017.  Moretz sent the emails to Customer 3 from a non-Broker A email
account.  The three 2017 emails Moretz sent Customer 3 were nearly identical to one another and
very similar to the email he sent to Customer 1 in September 2019.  The emails all referred to L

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Bonds by making repeated references to a “guaranteed” investment whose terms and interest rates
were consistent with L Bonds.
60. At a meeting with Customer 3 in the spring of 2018, Moretz again proposed L Bonds
as an investment.  Moretz told Customer 3 that L Bonds had a higher return than her current
holdings.  Moretz also represented to Customer 3 that L Bonds were safe, with guaranteed
payments.  Customer 3 decided not to purchase L Bonds at that time.
61. In or about late July 2020, Moretz telephoned Customer 3 and again proposed that
she purchase L Bonds, because according to Moretz L Bonds would provide a better return than she
was getting on other investments.  Moretz told Customer 3 that L Bond returns were “safe” and
“guaranteed,” and she would get her money back.  Moretz also told Customer 3 that L Bonds were
an insurance product.
62. After Moretz told her that L Bonds were guaranteed, Customer 3 decided to
purchase a $45,000 L Bond in August 2020.  Moretz’s misrepresentations of L Bonds as guaranteed
were important to potential customers, like Customer 3, in deciding whether to invest in them.
63. Moretz knew or was reckless in not knowing the statements he made to Customer 3
that L Bonds were safe were false at the time he made the statements.
64. Moretz knew or was reckless in not knowing the statements he made to Customer 3
that L Bonds were guaranteed were false at the time he made the statements.
65. Moretz knew or was reckless in not knowing that his representations to Customer 3
that L Bonds were guaranteed violated FINRA’s prohibition on guarantees.
66. Moretz knew or was reckless in not knowing that his representations to Customer 3
that L Bonds were guaranteed violated Broker A’s Written Supervisory Procedures.
67. Moretz received commission payments from Broker A as a result of Customer 3’s
purchase of L Bonds.

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e. Defendant Moretz’s Sale to Customer 4 Through Customer 3
68. Customer 4 is the sister of Customer 3.  Customer 4 had received a medical
settlement for her permanently disabled son and wanted to invest the proceeds of that settlement to
enable him to secure a place to live in a few years.  Customer 4 told Moretz she had no tolerance for
risk and wanted the investment to be as safe as possible.  Customer 4 told Moretz the money she
was investing was all of the money her disabled son had, and they could not afford to lose any of it.
69. Moretz told Customer 4 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.
70. On July 28, 2020, Moretz sent Customer 4 an email in which he described two
investment options – multi-year guaranteed annuities and L Bonds.  Moretz represented that both
had “guaranteed payouts for the specified period[,]” and represented separately that L Bonds were
“guaranteed for the specified period.” Moretz’s email also identified a third option of opening an
investment account, but it explained that the investment account “would come with the risk of loss
which may not be suitable due to the purpose of the money.”  Moretz sent the email from a non-
Broker A email address.
71. After receiving the July 28, 2020 email from Moretz, Customer 4 decided to
purchase a $45,000 L Bond.
72. Moretz’s misrepresentations of L Bonds as guaranteed were important to potential
customers, like Customer 4, in deciding whether to invest in them.
73. Moretz knew or was reckless in not knowing the representations he made to
Customer 4 that L Bonds had a guaranteed payout w ere false at the time he made the statements.
74. Moretz knew or was reckless in not knowing the representations he made to
Customer 4 that L Bonds were guaranteed for the specified period w ere false at the time he made
the statements.

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75. Moretz knew or was reckless in not knowing the representations he made to
Customer 4 that L Bonds did not come with the risk of loss were false at the time he made the
statements.
76. Moretz knew or was reckless in not knowing the representations he made to
Customer 4 that L Bonds were 100% safe and 100% guaranteed with regard to both the principal
and interest and that there was zero risk in an investment in L Bonds were false at the time he made
the statements.
77. Moretz knew or was reckless in not knowing that his representations to Customer 4
that L Bonds were guaranteed violated FINRA’s prohibition on guarantees.
78.  Moretz knew or was reckless in not knowing that his representations to Customer 4
that L Bonds were guaranteed violated Broker A’s Written Supervisory Procedures.
79. Customer 4 had minimal investable assets outside of the settlement funds for her
disabled son.  Broker A’s Written Supervisory Procedures limited a customer’s allocation to non-
liquid investments, such as L Bonds, to 15% of the customer’s total investable assets.  Moretz knew
Customer 4 did not have sufficient investable assets to qualify to invest her disabled son’s
settlement funds in L Bonds.
80. In order to evade Broker A’s limitation on non-liquid investments, Moretz told
Customer 4 that Customer 3 could invest in L Bonds on behalf of Customer 4 and Customer 4’s
son, using their money.  Moretz explained to Customer 4, however, that payment for her L Bond
purchase would have to come from Customer 3.
81. On August 10, 2020, Moretz sent an email to both Customer 3 and Customer 4 “to
check in to make sure everything is OK for us to start sending over the GWG L-Bond forms.”
Moretz sent the email to Customer 3 and Customer 4 from a non-Broker A email account.

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82. On August 13, 2020, Customer 3 emailed the completed forms for Customer 4’s L
Bond purchase back to Moretz and copied Customer 4 on the email.  Customer 3’s email stated that
she was attaching “the signed forms for the L-Bonds for [Customer 4’s son]/[Customer 4].”
Customer 3 used the name of Customer 4’s son in the filename of the attached PDF file containing
the signed documents.
83. At 8:47 a.m. on August 14, 2020, Moretz emailed Customer 3, copying Customer 4
on the email: “The check must come from a bank account in your name in order to be in good
order.”  Moretz sent the 8:47 a.m. email from a non-Broker A email account.
84. At 9:36 a.m. on August 14, 2020, Customer 4 emailed Moretz and asked: “Does the
origination of the check matters, should it come from [Customer 3]’s account?”  At 10:17 a.m. on
August 14, 2020, Moretz responded with an email to Customer 4 stating: “Yes, it must come from
[Customer 3]’s account.  The interest must also be paid to an account with her name on it.”   Moretz
sent the 10:17 a.m. email to Customer 4 from a non-Broker A email account.
85. Customer 4 conveyed $45,000 from her son’s medical settlement to Customer 3 to
purchase L Bonds on their behalf.  Customer 3, using the funds provided by Customer 4, wrote a
check dated August 18, 2020 for the purchase of the L Bonds for Customer 4.  In the memo line of
the check, Customer 3 wrote: “Moretz for [Customer 4’s son]”.
86. Moretz knew that Customer 3 was purchasing the L Bond on behalf of Customer 4
and Customer 4’s son.  Moretz knew or should have known that the source of funds for the
purchase was the medical settlement for Customer 4’s son.
87. As part of an L Bond purchase, Broker A registered representatives completed an L
Bond subscription agreement, a transaction cover sheet, and a client acknowledgment form.
Registered representatives submitted the completed documents to a Broker A supervisor for review.

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88.   To conceal the true purpose of the transaction, Moretz made several false
statements on the transaction cover sheet he submitted for Broker A’s supervisory review for the L
Bonds Customer 3 purchased for Customer 4 and Customer 4’s son.  Moretz falsely identified the
client as Customer 3 and made no mention of Customer 4 or her son.  Moretz further falsely
identified the source of funding as Customer 3’s savings and made no mention of Customer 4 or the
medical settlement.  Moretz further identified the reason for the choice of L Bonds as “[Customer
3] would like to put some of her savings into a short-term investment with better interest than her
bank savings account.”  Moretz made no mention of Customer 3 purchasing the L Bonds on behalf
of Customer 4 and her son, Customer 4’s lack of sufficient assets to purchase L Bonds, or the need
to preserve the money to pay living expenses for Customer 4’s disabled son.
89. On August 17, 2020, Moretz submitted the Transaction Cover Sheet, along with
other documents, for Customer 3’s purchase on behalf of Customer 4 and Customer 4’s son for
supervisory review.  Moretz did not disclose to the supervisor that he had made false statements on
the transaction cover sheet.  Moretz did not disclose that Customer 3 was purchasing the L Bonds
on behalf of Customer 4 and Customer 4’s son, who did not have sufficient assets to qualify to
purchase L Bonds.  After receiving the document package, including the false statements on the
transaction cover sheet, a Broker A supervisor approved the purchase.
90. Moretz received commission payments from Broker A as a result of Customer 3’s
purchase of L Bonds on behalf of Customer 4 and Customer 4’s son.
COUNT I
Fraud in the Offer or Sale of Securities
[Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a)]

91. Paragraphs 1-90 are hereby realleged and incorporated herein by reference.
92. By engaging in the acts and conduct described in this Complaint, Defendant Moretz,
directly or indirectly, in the offer or sale of securities to Customer 1, Customer 2, Customer 3, and

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Customer 4, by use of the means or instruments of transportation or communication in interstate
commerce or by use of the mails, used and employed devices, schemes, or artifices to defraud;
obtained money or property by means of untrue statements of a material fact or an omission to state
material facts necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; and engaged in transactions, practices, or courses of
business which operated or would operate as a fraud and deceit upon the purchaser.
93. Moretz engaged in the fraudulent conduct described above intentionally, recklessly,
and/or negligently.
94. By reason of the foregoing, Defendant Moretz, directly or indirectly, violated, and,
unless enjoined, will continue to violate Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
COUNT II
Fraud in Connection with the Purchase or Sale of Securities
[Exchange Section 10(b), 15 U.S.C. § 78j(b), and Rule 10b-5,   17 C.F.R. § 240.10b-5]

95. Paragraphs 1-90 are hereby realleged and incorporated herein by reference.
96. By reason of the acts and conduct described in this Complaint, Defendant Moretz
directly or indirectly, in connection with the purchase or sale of securities to Customer 1, Customer
2, Customer 3, and Customer 4, by the use of means or instrumentalities of interstate commerce or
of the mails or any facility of a national securities exchange: (a) used and employed devices,
schemes, or artifices to defraud; (b) made untrue statements of a material fact or omitted to state
material facts necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; and (c) engaged in acts, practices, or courses of
business which operated or would operate as a fraud and deceit upon any person.
97. Moretz engaged in the fraudulent conduct described above intentionally or
recklessly.

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98. By reason of the foregoing, Moretz, directly or indirectly, violated, and, unless
enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule
10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder.

PRAYER FOR RELIEF

WHEREFORE, the SEC respectfully requests that this Court:
I.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of Civil
Procedure, permanently enjoining Defendant Moretz, and his officers, agents, servants, employees
and attorneys, and those persons in active concert or participation with any of them, who receive
actual notice of the judgment by personal service or otherwise, and each of them, from violating
Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
II.
Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of Civil
Procedure, permanently enjoining Defendant Moretz, and his officers, agents, servants, employees
and attorneys, and those persons in active concert or participation with any of them, who receive
actual notice of the judgment by personal service or otherwise, and each of them, from violating
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b- 5 thereunder [17 C.F.R. §
240.10b-5].
III.
Order Defendant to pay disgorgement of any unjust enrichment he received as a result of
the misconduct alleged, together with prejudgment interest thereon, under Sections 21(d)(3),
21(d)(5) and 21(d)(7) of the Exchange Act, 15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7).

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IV.
Order Defendant to pay civil monetary penalties pursuant to Section 20(d) of the Securities
Act [15 U.S.C. §   77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §   78u(d)(3)].
V.
Retain jurisdiction of this action in accordance with the principles of equity and the Federal
Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees
that may be entered, or to entertain any suitable application or motion for additional relief within
the jurisdiction of this Court.
VI.
Grant such other and further relief as this Court may determine to be just and necessary.

JURY DEMAND
The SEC demands a trial by jury on all claims so triable.

Dated: July 29, 2024. UNITED STATES SECURITIES AND
 EXCHANGE COMMISSION

 By:  /s/ Christopher H. White
 Christopher H. White (IL Bar No. 6280031)
 Jonathan Epstein (IL Bar No. 6237031)

 175 West Jackson Blvd, Suite 1450
 Chicago, IL 60604
 Telephone: (312) 353-7390
 E-mail: [email protected]

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IN THE UNITED STATES DISTRICT COURT 
FOR THE WESTERN DISTRICT OF NORTH CAROLINA  

CHARLOTTE DIVISION 
NO. 5:24-cv-00171 

 
 
UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION, 
 

Plaintiff,     
 
v. 
 
GARRETT W. MORETZ, 
 

Defendant. 
 

 
 
 
 
              COMPLAINT 
              (Jury Demanded) 

 
 

Plaintiff, United States Securities and Exchange Commission (“SEC” or the “Commission”), 

files this Complaint against Defendant Garrett W. Moretz as follows: 

NATURE OF THE ACTION 

1. Moretz is a registered representative and investment adviser representative of 

Broker A.  Moretz deceived multiple retail investors by making repeated misrepresentations to them 

regarding high-risk debt securities known as L Bonds, which were issued by GWG Holdings, Inc. 

(“GWG”).   

2. Moretz, in both electronic mail messages and oral communications, repeatedly 

misrepresented L Bonds to investors as “guaranteed.”  Moretz knew the L Bonds he offered and 

sold to investors were not guaranteed, and he knew they were not guaranteed at the time he 

represented them as such to investors.   

3. Since at least 2017, Moretz misrepresented L Bonds to investors and potential 

investors as “guaranteed.”   From at least September 2019 until in or about August 2020, Moretz 

misrepresented L Bonds as “guaranteed” to four customers who subsequently purchased L Bonds. 

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4. Through his conduct, Moretz violated, and unless restrained will continue to violate, 

Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and Section 10(b) 

of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]. 

5. The SEC seeks a permanent injunction, disgorgement and prejudgment interest, and 

civil penalties against Moretz based on his violations of Section 17(a) of the Securities Act and 

Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. 

JURISDICTION AND VENUE 
 

6. The Commission brings this action to restrain Moretz from engaging in the 

transactions, acts, practices and courses of business alleged in this Complaint, and transactions, 

acts, practices and courses of business of similar purport and object, for disgorgement of illegally 

obtained funds, civil money penalties, and other equitable relief. 

7. This Court has jurisdiction over this action pursuant to Sections 20(b)-(d) and 22(a) 

of the Securities Act [15 U.S.C. §§ 77t(b)-(d) and 77v(a)], and Sections 21(d)-(e) and 27(a) of the 

Exchange Act [15 U.S.C. §§ 78u(d)-(e) and 78aa]. 

8. Venue lies in this district pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 

77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa], because transactions, acts, practices 

and courses of business constituting violations of the federal securities laws occurred, and Defendant 

transacts business, within the Western District of North Carolina. 

9. Defendant, directly and indirectly, made use of the means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange in connection 

with the transactions, acts, practices and courses of business alleged in this complaint. 

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10. There is a reasonable likelihood that Defendant will, unless enjoined, continue to 

engage in the transactions, acts, practices and courses of business set forth in this complaint, and 

transactions, acts, practices and courses of business of similar purport and object. 

DEFENDANT 

11. Garrett W. Moretz (“Moretz”), age 53, lives in Mooresville, North Carolina and is 

employed by Moretz Wealth Management, LLC, which is also located in Mooresville, North 

Carolina.  Moretz has been a registered representative and investment adviser representative of 

Broker A since approximately June 2017. 

RELATED ENTITY 

12. Broker A, headquartered in Rochester, New York, is registered with the 

Commission as a broker-dealer and investment adviser. Through its registered representatives and 

investment adviser representatives, including Moretz, Broker A sells securities to retail investors.  At 

all relevant times, L Bonds were one of the securities offered for sale by Broker A. 

FACTS 

A. GWG and the L Bonds 

13. GWG was a financial services company.  Prior to 2018, GWG’s business model 

involved purchasing life insurance policies from consumers who no longer wanted or needed them.  

GWG continued to pay the premiums and collected the policy benefits upon the insured’s death.  

As the result of a series of transactions in 2018 and 2019, GWG stopped acquiring life insurance 

policies and transitioned its business model to focus on providing liquidity to a broader range of 

alternative assets. 

14. GWG had a history of net losses and had never generated sufficient cash flows to 

fund its operations.  As such, GWG depended on financing, primarily debt financing, including the 

sale of L Bonds to the public, to fund its operations. 

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15. L Bonds were corporate bonds issued by GWG and sold to retail investors through a 

network of broker-dealers, including Broker A.  As of December 31, 2019, GWG had 

approximately $1.3 billion in L Bonds outstanding.  The credit risk of L Bonds was not rated by any 

independent rating agency. 

16. For the year ended December 31, 2019, GWG posted a net loss from operations of 

$79.6 million and a negative operating cash flow of $142.8 million.   

17. GWG’s largest tangible asset was its portfolio of life insurance policies, which had a 

recorded fair value of $796 million as of December 31, 2019.  But L Bond holders’ claims to 

GWG’s life insurance assets were subordinated to a senior credit facility, which had a direct 

security interest in most of the life insurance policies. 

18. As of December 31, 2019, GWG’s largest asset was goodwill, which constituted 

approximately 65% of GWG’s assets.  Goodwill is an intangible asset that cannot be used to pay 

down debt.  Eliminating goodwill, GWG’s liabilities were well in excess of its assets as of 

December 31, 2019. 

19. During the relevant time, GWG offered L Bonds pursuant to prospectuses dated 

December 1, 2017 and June 3, 2020.  Both prospectuses were supplemented multiple times.  The 

supplements each stated that they should be read in conjunction with the prospectus, and that the 

information in the supplements was qualified by reference to the prospectus.  (The December 1, 

2017 and June 3, 2020 prospectuses, as well as each supplement to those prospectuses, are 

collectively referred to as the “Prospectuses.”) 

20. GWG filed all of the Prospectuses with the Commission.  All of the Prospectuses 

were publicly available at no charge through the Commission’s EDGAR system and could be 

accessed by Moretz at any time.  GWG also provided the Prospectuses to broker-dealer and 

investment adviser firms that sold L Bonds, including Broker A. 

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21. Both the December 1, 2017 and June 3, 2020 prospectuses stated: “Investing in our 

L Bonds may be considered speculative and involves a high degree of risk, including the risk of 

losing your entire investment.”   

22. Both the December 1, 2017 and June 3, 2020 prospectuses, further stated: “L Bonds 

are only suitable for persons with substantial financial resources and with no need for liquidity in 

this investment.” 

23. The Prospectuses disclosed that the same assets backing the L Bonds were pledged 

as direct collateral securing GWG’s obligations under a senior credit facility.  As the December 1, 

2017 and June 3, 2020 prospectuses both stated: “[t]hese facts present the risk to investors that the 

collateral security . . . granted for our obligations under the L Bonds may be insufficient to repay 

the L Bonds when they become due.” 

24. The Prospectuses disclosed that L Bond holders had no right to require GWG to 

redeem any L Bond prior to its due date, except in the case of the holder’s death, bankruptcy, or 

total permanent disability.  The Prospectuses disclosed that GWG, in its sole discretion, could allow 

an L Bond holder to redeem an L Bond prior to maturity, less a 6% fee, but that GWG was not 

required to do so. 

25. Both the December 1, 2017 and June 3, 2020 prospectuses disclosed that GWG did 

not intend to list L Bonds on any securities exchange during the offering period, nor did it expect a 

secondary market in the L Bonds to develop.  They further stated: “As a result, you should not 

expect to be able to resell your L Bonds regardless of how we perform.  Accordingly, an investment 

in our L Bonds is not suitable for investors that require liquidity in advance of their L Bond’s 

maturity date.” 

26. In April 2021, GWG halted L Bond sales because it was unable to file its 2020 Form 

10-K with the Commission.  GWG did not file its 2020 Form 10-K until November 5, 2021.  GWG 

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resumed L Bond sales on December 1, 2021, but suspended them again on January 10, 2022.  From 

January 15, 2022 onwards, GWG failed to make any interest or principal payments that were due on 

outstanding L Bonds.  On April 20, 2022, GWG filed for Chapter 11 bankruptcy.   

B. Defendant Moretz’s Sale of L Bonds 

27. Moretz has worked at various investment advisers and broker-dealers for more than 

20 years.  Moretz has been a registered representative and investment adviser representative of 

Broker A since in or about June 2017. 

28. At all relevant times, Moretz received commissions from Broker A for investments 

he sold to his brokerage customers and a fee that was a percentage of assets under management for 

his investment advisory clients.   

29. Moretz, through Broker A, sold L Bonds to customers from 2017 until at least 

December 2020. 

30. During the time he was selling L Bonds, Moretz knew the risks of L Bonds included 

the possibility investors would lose their entire investment.  Moretz considered L Bonds a 

speculative investment because there was a risk an investor would lose 100% of their principal.  

31. Moretz knew that at the time he was selling L Bonds the interest payments on L 

Bonds were not guaranteed. 

32. Moretz knew at the time he was selling L Bonds that the return of an investor’s 

principal was not guaranteed. 

33. Moretz knew that at the time he was selling L Bonds that they were not an 

investment vehicle for preserving an investor’s funds. 

a. Guarantees and Securities 

34. The Financial Industry Regulatory Authority (“FINRA”) is a self-regulatory 

organization for broker-dealers and is a registered securities association under Section 15A of the 

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Exchange Act [15 U.S.C. § 78o-3].  Broker A is a member of FINRA, and its registered 

representatives are required to follow rules promulgated by FINRA.   

35. FINRA Rule 2150, titled “Improper Use of Customers’ Securities or Funds; 

Prohibition Against Guarantees and Sharing in Accounts[,]” states that “No member or person 

associated with a member shall guarantee a customer against loss in connection with any securities 

transaction or in any securities account of such customer.” 

36. Broker A’s Written Supervisory Procedures similarly provide: “Exaggerated claims, 

unwarranted superlatives or guarantees should never be used. FINRA Conduct Rule 2150 prohibits 

any individual associated with [Broker A] from guaranteeing a customer against loss in connection 

with ANY securities transaction or in ANY securities account of such customer.  This prohibition 

against guarantees is not solely for securities transactions effected through [Broker A].” 

37. Moretz knew he was prohibited from making guarantees related to securities, either 

as to their return or against loss.  Moretz knew that restriction applied to Broker A customers and 

potential customers for the offer or sale of securities, including L Bonds. 

b. Broker A’s Email Policies and Procedures 

38. Broker A’s Written Supervisory Procedures require that, “All business email 

communications of a [Broker A] registered representative must occur through their [Broker A] 

email address.  This requirement applies to [Broker A] related business correspondences with 

[Broker A] customers or prospective customers[.]” 

39. Moretz regularly used a non-Broker A email account to discuss securities business 

with Broker A customers.   

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c. Defendant Moretz’s Sales to Customer 1 and Customer 2 

40. Moretz misrepresented L Bonds as guaranteed to a pair of investors, husband 

(“Customer 1”) and wife (“Customer 2”), who purchased an aggregate of $154,500 in L Bonds 

through Moretz between January 2020 and December 2020. 

41. In or about September 2019, prior to any L Bond purchases by either Customer 1 or 

Customer 2, Moretz sent Customer 1 an email describing an investment product for Customer 1 and 

Customer 2 to consider. The investment Moretz described in the email was L Bonds.  

42. Moretz’s email to Customer 1 asked: “Want to take some money out of the market 

for preservation?”  In making that statement, Moretz represented that L Bonds were an investment 

vehicle for preserving an investor’s assets. 

43. Moretz’s email to Customer 1 made multiple references to L Bonds being 

guaranteed: 

a. “Are you looking for a great guaranteed rate of return and payout on your 

money?” 

b. “We have fully guaranteed investment/income options available in 2, 3, 5, 

and 7 year terms.” 

c. “These are guaranteed to pay the specified rate of return MONTHLY for the 

predetermined period after which you get your full investment returned.” 

d. “These are all great opportunities for folks that want a steady rate of return 

and guaranteed payout.”  

44. Moretz’s email to Customer 1 guaranteed the monthly rate of return and return of 

principal for an L Bond investment.  

45. Moretz sent the email to Customer 1 from a non-Broker A email account even 

though it was a business communication to a customer or prospective customer regarding a security 

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offered by Broker A, which Broker A’s Written Supervisory Procedures required be sent from 

Moretz’s Broker A email address.  Moretz knew or was reckless in not knowing that if he had sent 

the email through his Broker A email account, Broker A likely would not have approved the email 

because it made guarantees regarding an investment. 

46. The language in Moretz’s email to Customer 1 was consistent with conversations 

Moretz had with Customer 1 and Customer 2 each time they purchased an L Bond.  During those 

conversations, Moretz orally misrepresented to Customer 1 and Customer 2 that L Bonds’ principal, 

interest, and rate of return were guaranteed. 

47. Moretz failed to tell Customer 1 and Customer 2 that L Bonds were a speculative or 

high-risk investment.  Whether L Bonds were a speculative and high-risk investment was an 

important consideration for potential investors like Customer 1 and Customer 2. 

48. The money Customer 1 and Customer 2 invested in L Bonds was money they could 

not afford to lose; they had held it in a bank for approximately 20 years and intended to use it for 

their children’s college education and other expenses. 

49. Moretz’s misrepresentations of L Bonds as guaranteed were important to the 

decision of potential customers, like Customer 1 and Customer 2, to invest in L Bonds. 

50. When Moretz represented to Customer 1 and Customer 2 that L Bonds were 

guaranteed, he 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.   

51. When Moretz represented to Customer 1 and Customer 2 that L Bonds were a means 

of preserving assets, he knew or was reckless in not knowing that his representations were false.   

52. When Moretz represented to Customer 1 and Customer 2 that L Bonds’ principal, 

interest, and rate of return were guaranteed, he knew or was reckless in not knowing that his 

representations were false. 

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53. Moretz knew that FINRA Rule 2150 prohibited him from making guarantees with 

respect to securities.  Moretz also knew or was reckless in not knowing that his representation of L 

Bonds as guaranteed in his September 2019 email violated FINRA Rule 2150. 

54. Moretz knew that Broker A’s Written Supervisory Procedures prohibited him from 

making guarantees with respect to securities.  Moretz also knew or was reckless in not knowing that 

his representation of L Bonds as guaranteed in his September 2019 email violated Broker A’s 

Written Supervisory Procedures. 

55. After receiving Moretz’s email to Customer 1, and after Moretz told Customer 1 and 

Customer 2 that L Bonds’ principal, interest, and rate of return were guaranteed, Customer 1 and 

Customer 2 purchased three L Bonds totaling $99,500 in January 2020. 

56. Customer 1 and Customer 2 purchased an additional $30,000 L Bond from Moretz in 

May 2020 and another $25,000 L Bond in December 2020, bringing their aggregate L Bond 

purchases from Moretz to $154,500.  Before both their May 2020 and December 2020 purchases, 

Customer 1 and Customer 2 had additional conversations with Moretz, in which he reiterated his 

misrepresentations that L Bonds were guaranteed. 

57. Moretz received commission payments from Broker A as a result of all of the L 

Bond purchases by Customer 1 and Customer 2. 

d. Defendant Moretz’s Sale to Customer 3 

58. Moretz misrepresented L Bonds as guaranteed to a customer (“Customer 3”) who 

purchased a $45,000 L Bond from Moretz in or about August 2020. 

59. Customer 3 first learned of L Bonds from a series of three emails Moretz sent her in 

the summer and fall of 2017.  Moretz sent the emails to Customer 3 from a non-Broker A email 

account.  The three 2017 emails Moretz sent Customer 3 were nearly identical to one another and 

very similar to the email he sent to Customer 1 in September 2019.  The emails all referred to L 

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Bonds by making repeated references to a “guaranteed” investment whose terms and interest rates 

were consistent with L Bonds.   

60. At a meeting with Customer 3 in the spring of 2018, Moretz again proposed L Bonds 

as an investment.  Moretz told Customer 3 that L Bonds had a higher return than her current 

holdings.  Moretz also represented to Customer 3 that L Bonds were safe, with guaranteed 

payments.  Customer 3 decided not to purchase L Bonds at that time. 

61. In or about late July 2020, Moretz telephoned Customer 3 and again proposed that 

she purchase L Bonds, because according to Moretz L Bonds would provide a better return than she 

was getting on other investments.  Moretz told Customer 3 that L Bond returns were “safe” and 

“guaranteed,” and she would get her money back.  Moretz also told Customer 3 that L Bonds were 

an insurance product. 

62. After Moretz told her that L Bonds were guaranteed, Customer 3 decided to 

purchase a $45,000 L Bond in August 2020.  Moretz’s misrepresentations of L Bonds as guaranteed 

were important to potential customers, like Customer 3, in deciding whether to invest in them. 

63. Moretz knew or was reckless in not knowing the statements he made to Customer 3 

that L Bonds were safe were false at the time he made the statements. 

64. Moretz knew or was reckless in not knowing the statements he made to Customer 3 

that L Bonds were guaranteed were false at the time he made the statements. 

65. Moretz knew or was reckless in not knowing that his representations to Customer 3 

that L Bonds were guaranteed violated FINRA’s prohibition on guarantees. 

66. Moretz knew or was reckless in not knowing that his representations to Customer 3 

that L Bonds were guaranteed violated Broker A’s Written Supervisory Procedures. 

67. Moretz received commission payments from Broker A as a result of Customer 3’s 

purchase of L Bonds. 

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e. Defendant Moretz’s Sale to Customer 4 Through Customer 3 

68. Customer 4 is the sister of Customer 3.  Customer 4 had received a medical 

settlement for her permanently disabled son and wanted to invest the proceeds of that settlement to 

enable him to secure a place to live in a few years.  Customer 4 told Moretz she had no tolerance for 

risk and wanted the investment to be as safe as possible.  Customer 4 told Moretz the money she 

was investing was all of the money her disabled son had, and they could not afford to lose any of it. 

69. Moretz told Customer 4 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. 

70. On July 28, 2020, Moretz sent Customer 4 an email in which he described two 

investment options – multi-year guaranteed annuities and L Bonds.  Moretz represented that both 

had “guaranteed payouts for the specified period[,]” and represented separately that L Bonds were 

“guaranteed for the specified period.” Moretz’s email also identified a third option of opening an 

investment account, but it explained that the investment account “would come with the risk of loss 

which may not be suitable due to the purpose of the money.”  Moretz sent the email from a non-

Broker A email address. 

71. After receiving the July 28, 2020 email from Moretz, Customer 4 decided to 

purchase a $45,000 L Bond. 

72. Moretz’s misrepresentations of L Bonds as guaranteed were important to potential 

customers, like Customer 4, in deciding whether to invest in them.  

73. Moretz knew or was reckless in not knowing the representations he made to 

Customer 4 that L Bonds had a guaranteed payout were false at the time he made the statements. 

74. Moretz knew or was reckless in not knowing the representations he made to 

Customer 4 that L Bonds were guaranteed for the specified period were false at the time he made 

the statements.   

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75. Moretz knew or was reckless in not knowing the representations he made to 

Customer 4 that L Bonds did not come with the risk of loss were false at the time he made the 

statements. 

76. Moretz knew or was reckless in not knowing the representations he made to 

Customer 4 that L Bonds were 100% safe and 100% guaranteed with regard to both the principal 

and interest and that there was zero risk in an investment in L Bonds were false at the time he made 

the statements. 

77. Moretz knew or was reckless in not knowing that his representations to Customer 4 

that L Bonds were guaranteed violated FINRA’s prohibition on guarantees. 

78.  Moretz knew or was reckless in not knowing that his representations to Customer 4 

that L Bonds were guaranteed violated Broker A’s Written Supervisory Procedures. 

79. Customer 4 had minimal investable assets outside of the settlement funds for her 

disabled son.  Broker A’s Written Supervisory Procedures limited a customer’s allocation to non-

liquid investments, such as L Bonds, to 15% of the customer’s total investable assets.  Moretz knew 

Customer 4 did not have sufficient investable assets to qualify to invest her disabled son’s 

settlement funds in L Bonds. 

80. In order to evade Broker A’s limitation on non-liquid investments, Moretz told 

Customer 4 that Customer 3 could invest in L Bonds on behalf of Customer 4 and Customer 4’s 

son, using their money.  Moretz explained to Customer 4, however, that payment for her L Bond 

purchase would have to come from Customer 3. 

81. On August 10, 2020, Moretz sent an email to both Customer 3 and Customer 4 “to 

check in to make sure everything is OK for us to start sending over the GWG L-Bond forms.”  

Moretz sent the email to Customer 3 and Customer 4 from a non-Broker A email account. 

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82. On August 13, 2020, Customer 3 emailed the completed forms for Customer 4’s L 

Bond purchase back to Moretz and copied Customer 4 on the email.  Customer 3’s email stated that 

she was attaching “the signed forms for the L-Bonds for [Customer 4’s son]/[Customer 4].”  

Customer 3 used the name of Customer 4’s son in the filename of the attached PDF file containing 

the signed documents. 

83. At 8:47 a.m. on August 14, 2020, Moretz emailed Customer 3, copying Customer 4 

on the email: “The check must come from a bank account in your name in order to be in good 

order.”  Moretz sent the 8:47 a.m. email from a non-Broker A email account. 

84. At 9:36 a.m. on August 14, 2020, Customer 4 emailed Moretz and asked: “Does the 

origination of the check matters, should it come from [Customer 3]’s account?”  At 10:17 a.m. on 

August 14, 2020, Moretz responded with an email to Customer 4 stating: “Yes, it must come from 

[Customer 3]’s account.  The interest must also be paid to an account with her name on it.”   Moretz 

sent the 10:17 a.m. email to Customer 4 from a non-Broker A email account. 

85. Customer 4 conveyed $45,000 from her son’s medical settlement to Customer 3 to 

purchase L Bonds on their behalf.  Customer 3, using the funds provided by Customer 4, wrote a 

check dated August 18, 2020 for the purchase of the L Bonds for Customer 4.  In the memo line of 

the check, Customer 3 wrote: “Moretz for [Customer 4’s son]”.   

86. Moretz knew that Customer 3 was purchasing the L Bond on behalf of Customer 4 

and Customer 4’s son.  Moretz knew or should have known that the source of funds for the 

purchase was the medical settlement for Customer 4’s son. 

87. As part of an L Bond purchase, Broker A registered representatives completed an L 

Bond subscription agreement, a transaction cover sheet, and a client acknowledgment form.  

Registered representatives submitted the completed documents to a Broker A supervisor for review. 

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88.   To conceal the true purpose of the transaction, Moretz made several false 

statements on the transaction cover sheet he submitted for Broker A’s supervisory review for the L 

Bonds Customer 3 purchased for Customer 4 and Customer 4’s son.  Moretz falsely identified the 

client as Customer 3 and made no mention of Customer 4 or her son.  Moretz further falsely 

identified the source of funding as Customer 3’s savings and made no mention of Customer 4 or the 

medical settlement.  Moretz further identified the reason for the choice of L Bonds as “[Customer 

3] would like to put some of her savings into a short-term investment with better interest than her 

bank savings account.”  Moretz made no mention of Customer 3 purchasing the L Bonds on behalf 

of Customer 4 and her son, Customer 4’s lack of sufficient assets to purchase L Bonds, or the need 

to preserve the money to pay living expenses for Customer 4’s disabled son. 

89. On August 17, 2020, Moretz submitted the Transaction Cover Sheet, along with 

other documents, for Customer 3’s purchase on behalf of Customer 4 and Customer 4’s son for 

supervisory review.  Moretz did not disclose to the supervisor that he had made false statements on 

the transaction cover sheet.  Moretz did not disclose that Customer 3 was purchasing the L Bonds 

on behalf of Customer 4 and Customer 4’s son, who did not have sufficient assets to qualify to 

purchase L Bonds.  After receiving the document package, including the false statements on the 

transaction cover sheet, a Broker A supervisor approved the purchase.     

90. Moretz received commission payments from Broker A as a result of Customer 3’s 

purchase of L Bonds on behalf of Customer 4 and Customer 4’s son. 

COUNT I  
Fraud in the Offer or Sale of Securities 

[Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a)] 
 

91. Paragraphs 1-90 are hereby realleged and incorporated herein by reference. 

92. By engaging in the acts and conduct described in this Complaint, Defendant Moretz, 

directly or indirectly, in the offer or sale of securities to Customer 1, Customer 2, Customer 3, and 

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Customer 4, by use of the means or instruments of transportation or communication in interstate 

commerce or by use of the mails, used and employed devices, schemes, or artifices to defraud; 

obtained money or property by means of untrue statements of a material fact or an omission to state 

material facts necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; and engaged in transactions, practices, or courses of 

business which operated or would operate as a fraud and deceit upon the purchaser. 

93. Moretz engaged in the fraudulent conduct described above intentionally, recklessly, 

and/or negligently. 

94. By reason of the foregoing, Defendant Moretz, directly or indirectly, violated, and, 

unless enjoined, will continue to violate Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a). 

COUNT II 
Fraud in Connection with the Purchase or Sale of Securities 

[Exchange Section 10(b), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5] 
 

95. Paragraphs 1-90 are hereby realleged and incorporated herein by reference. 

96. By reason of the acts and conduct described in this Complaint, Defendant Moretz 

directly or indirectly, in connection with the purchase or sale of securities to Customer 1, Customer 

2, Customer 3, and Customer 4, by the use of means or instrumentalities of interstate commerce or 

of the mails or any facility of a national securities exchange: (a) used and employed devices, 

schemes, or artifices to defraud; (b) made untrue statements of a material fact or omitted to state 

material facts necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; and (c) engaged in acts, practices, or courses of 

business which operated or would operate as a fraud and deceit upon any person. 

97. Moretz engaged in the fraudulent conduct described above intentionally or 

recklessly. 

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98. By reason of the foregoing, Moretz, directly or indirectly, violated, and, unless 

enjoined, will continue to violate Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 

10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder. 

 

PRAYER FOR RELIEF 
 

WHEREFORE, the SEC respectfully requests that this Court: 

I. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of Civil 

Procedure, permanently enjoining Defendant Moretz, and his officers, agents, servants, employees 

and attorneys, and those persons in active concert or participation with any of them, who receive 

actual notice of the judgment by personal service or otherwise, and each of them, from violating 

Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].   

II. 

Issue a judgment, in a form consistent with Rule 65(d) of the Federal Rules of Civil 

Procedure, permanently enjoining Defendant Moretz, and his officers, agents, servants, employees 

and attorneys, and those persons in active concert or participation with any of them, who receive 

actual notice of the judgment by personal service or otherwise, and each of them, from violating 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b- 5 thereunder [17 C.F.R. § 

240.10b-5].   

III. 

Order Defendant to pay disgorgement of any unjust enrichment he received as a result of 

the misconduct alleged, together with prejudgment interest thereon, under Sections 21(d)(3), 

21(d)(5) and 21(d)(7) of the Exchange Act, 15 U.S.C. §§ 78u(d)(3), 78u(d)(5), 78u(d)(7). 

  

Case 5:24-cv-00171   Document 1   Filed 07/29/24   Page 17 of 18



18  

IV. 

Order Defendant to pay civil monetary penalties pursuant to Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]. 

V. 

Retain jurisdiction of this action in accordance with the principles of equity and the Federal 

Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees 

that may be entered, or to entertain any suitable application or motion for additional relief within 

the jurisdiction of this Court. 

VI.  

Grant such other and further relief as this Court may determine to be just and necessary. 

 

JURY DEMAND 

The SEC demands a trial by jury on all claims so triable.   

 
 
 
Dated: July 29, 2024. UNITED STATES SECURITIES AND 
 EXCHANGE COMMISSION 
 
 
 By:  /s/ Christopher H. White 
 Christopher H. White (IL Bar No. 6280031) 
 Jonathan Epstein (IL Bar No. 6237031) 
  
 175 West Jackson Blvd, Suite 1450 
 Chicago, IL 60604 
 Telephone: (312) 353-7390 
 E-mail: [email protected] 
  
  

Case 5:24-cv-00171   Document 1   Filed 07/29/24   Page 18 of 18


	JURISDICTION AND VENUE
	COUNT I
	Fraud in the Offer or Sale of Securities
	[Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a)]
	COUNT II
	Fraud in Connection with the Purchase or Sale of Securities
	[Exchange Section 10(b), 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5]
	PRAYER FOR RELIEF