SEC v. GARY C. SNISKY, No. 1:13-cv-03149, District of Colorado (Nov. 21, 2013) — Complaint

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 13-cv-03149
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Plaintiff,
v.
GARY C. SNISKY
Defendant.
______________________________________________________________________
COMPLAINT

As its Complaint, Plaintiff, Securities and Exchange Commission, alleges as
follows:
I. SUMMARY
1. This  matter  concerns  an  offering  fraud scheme  conducted  by  Gary  C.  Snisky
(“Snisky”)  and  his  Longmont,  Colorado-based  investment  entity,  Arete,  LLC  (“Arete”).
From  August  2011  through  January  2013,  Snisky  fraudulently raised  at  least  $3.8
million from more than 40 investors in Colorado and seven other states through the sale
of membership interests in Arete and other related funds.
2. Primarily targeting annuity holders, Snisky used insurance agents to conduct his
offering.    At  Snisky’s  direction,  these  salespeople  solicited  mostly  elderly  annuity-
holding clients to purchase Arete, a purportedly safe and more profitable alternative to
an  annuity,  in  which  investors  could  supposedly  enjoy  the  same  consistent,  no-risk

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returns  as  most  annuities  while  also  having  the  ability  to  withdraw  the  interest  earned
and principal of the investment after ten years without penalty.
3. Investors  were  told  that  their  investment  in  Arete  would  provide  a  guaranteed
annual return of 6% or 7%; a 10% bonus would be paid to compensate for any annuity
withdrawal penalties; their funds would be used to purchase “agency” bonds backed by
the  “full  faith  and  credit”  of  the  United  States  Government;  and  Snisky,  as  an
“institutional trader,” would use these bonds to engage in overnight banking sweeps.
4. These  representations,  however,  were  false.    Snisky  did  not  purchase  any
agency  bonds,  nor  did  he  ever  engage  in  any  overnight  banking  sweeps.    Instead,
Snisky  misappropriated  approximately  $2.8  million  of  investor  funds,  mostly  through
cash withdrawals.  He used these funds to pay commissions to his salespeople, make
payments on his personal mortgage, and otherwise for his own personal benefit.
II. VIOLATIONS
5. As  a  result  of  the  conduct  described  herein,  defendant  Snisky  directly  or
indirectly engaged in transactions, acts, practices, or courses of business that constitute
violations  of  Sections  5(a),  5(c),  and  17(a)  of  the  Securities  Act  of  1933  (“Securities
Act”)  [15  U.S.C.  §§ 77e(a),  77e(c),  and  77q(a)],  Sections 10(b) and  15(a)  of  the
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b) and 78(o)], Rule
10b-5   thereunder   [17   C.F.R.   § 240.10b-5],   Sections   206(1),   (2),   and   (4)   of   the
Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1), 80b-6(2), and
80b-6(4)],  and  Rule  206(4)-8  thereunder  [17  C.F.R.  § 275.206(4)-8].    In  addition,  as  a
result of the conduct described herein, defendant Snisky aided and abetted violations of

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Section  7(a)  of  the  Investment  Company  Act  of  1940  [15  U.S.C.  §§ 80a-7].    Unless
defendant Snisky  is  permanently  restrained  and  enjoined,  he  will  again  engage  in  the
transactions, acts, practices, and courses of business set forth in this Complaint, and in
transactions, acts, practices, and courses of business of similar type and object.
III. JURISDICTION AND VENUE
6. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and
22(a)  of  the  Securities  Act  [15  U.S.C.  §§  77t(b),  77t(d),  and  77v(a)],  Sections  21(d),
21(e), and 27  of  the  Exchange  Act  [15  U.S.C.  §§  78u(d),  78u(e),  and  78aa],  Sections
209(d) and 214 of the Advisers Act [15 U.S.C. §§ 80b-9(d) and 80b-14] and Sections 42
and 44 of the Investment Company Act [15 U.S.C. §§ 80a-41 and 80a-43].
7. Defendant,  directly  or  indirectly,  made  use  of  the  means  or  instruments  of
transportation    or    communication    in    interstate    commerce,    the    means    and
instrumentalities  of  interstate  commerce,  or  of  the  mails,  in  connection  with  the  acts,
practices, and courses of business set forth in this Complaint.
8. Venue  lies  in  this  Court  pursuant  to Section  22(a)  of  the  Securities  Act  and
Section 27(a) of the Exchange Act.  Defendant resides within this district and certain of
the  acts,  practices,  transactions,  and  courses  of  business  alleged  in  this  Complaint
occurred within the District of Colorado.
IV. DEFENDANT AND HIS ENTITIES
9. Gary  C.  Snisky,  age  46  (as  of  November,  2013),  is  a  resident  of  Longmont,
Colorado.    He  was  the  sole  managing  member  of  the  following  entities:    Arete,  LLC;
CMG  Offering  –  12PO5i,  LLC  (“CMG5”);  CMG  Offering  –  12PO10i,  LLC  (“CMG10”);

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Summit Offering –  12PO5i,  LLC  (“Summit5”);  and  Summit  Offering  –  12PO10i,  LLC
(“Summit10”).    Snisky  also had  an  ownership  interest  in  Arete,  Ltd.,  a/k/a  Sky  Peak
Capital Management, a Cheyenne, Wyoming based investment adviser registered with
the Commission.
1
  Snisky formerly held Series 7, 62, and 63, licenses, which all expired
in 1999.
10. Arete was a Colorado limited liability company with its principal place of business
in Longmont, Colorado.  Snisky was Arete’s sole managing member.  Arete functioned
both as the entity through which Snisky engaged in his overall business operations and
as the primary issuer, or pooled investment vehicle, of the interests offered and sold to
investors.  Snisky formed Arete in June 2011, and voluntarily dissolved the entity in April
2012.  Arete has never registered an offering of securities under the Securities Act or a
class  of  securities  under  the  Exchange  Act.    Arete  has  never  been  registered  with  the
Commission in any capacity.
11. After  dissolving  Arete  in  April  2012,  Snisky  formed CMG5, CMG10,  Summit5,
and  Summit10  which are  all  Colorado  limited  liability  companies  with their principal
place of business in Longmont, Colorado.  Snisky is the sole and managing member of
CMG5, CMG10, Summit 5, and Summit10.  CMG5, CMG10, Summit 5, and Summit10
were  each formed  in  April  2012  solely  as  a  “private  placement  LLC”  or  pooled
investment   vehicle   by   which   investors   invested   funds   for   the   Arete   investment.
Although some  investors  invested  in  CMG5,  CMG10,  Summit  5,  and Summit10,  the

1
 Arete, Ltd., a/k/a Sky Peak Capital Management, is not a participant in the conduct alleged in this
complaint.

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investors  uniformly  believed  they  were  investing  in Arete  and  all  investor  funds  were
deposited  into  bank  accounts  held  in  the  name  of  Arete.    CMG5,  CMG10,  Summit  5,
and Summit10 have never  registered an  offering  of  securities  under  the  Securities  Act
or  a  class  of  securities  under  the  Exchange  Act.    None  of  them has ever  been
registered with the Commission in any capacity.
V. FACTS
12. From  August  2011  through  January  2013,  Snisky  conducted  an  offering  raising
over $3.8 million from more than 40 investors in at least eight states including Colorado.
13. Many investors in Snisky’s offering were retired annuity holders.
14. Although  the  investment  contracts  offered  by  Snisky  identified different  funds
over the life of this scheme, including Arete, CMG5, CMG10, Summit5, and Summit10,
all of the investors believed they were investing in “Arete” and all investor funds flowed
through bank accounts held in Arete’s name.
15. In or about August 2011, Snisky began recruiting veteran insurance salespeople
to sell the Arete investment.  These individuals had an established client base, much of
which owned annuities.  Snisky reached out to these salespeople by phone, email and
in person to invite them to “training sessions” at Arete’s office in Longmont Colorado.
A.  Snisky Committed Fraud in Conducting His Offering
16. Snisky  described  Arete  as  an  “annuity-plus”  investment,  where  unlike  typical
annuities,  investors  could  withdraw  principal  and  interest  earned  after  ten  years  while
still  enjoying  a  no-risk,  6%  to  7%  guaranteed  annual  return.    Snisky  emphasized  the

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safety of the investment, touting himself as an “institutional trader” – with no middleman
fees – who could secure safe, government-backed agency bonds at a discount.
17. Snisky’s sales pitch was extremely convincing, leading one salesperson to invest
her own retirement funds in Arete.
18. Snisky created and provided all written documents that the sales people used in
soliciting   investors.      These   documents   included   Private   Placement   Memoranda
(“PPMs”)  and  Contribution  Agreements  for  Arete,  CMG5,  CMG10,  Summit5,  and
Summit10.    These  documents  contained  key  misrepresentations  about  the  safety  of
principal, guaranteed returns, and use of investor funds.
19. Snisky   also   showed   salespeople   fraudulent   investor   account   statements
purporting to show earnings from Arete’s investment activity.  Finally, Snisky distributed
an  Excel-based  financial  model  that  allowed  salespeople  to  enter  a  dollar  amount  of
investment  and  then  calculate  the  “guaranteed”  returns  which  could  be  printed  out  for
each  investor.    Snisky  was  adamant  that  only  documents  he  personally  authorized
could be given to investors.
20. Armed  with  these  offering  materials,  Snisky’s  sales  force  set  out  to  offer  the
Arete  investment  to  their  clients.    Most  of  these  clients  were  elderly,  unsophisticated,
unaccredited,  and  unqualified  investors.    Many  were  retired  and  most  had  a  net  worth
significantly less than $1 million, including any real estate or personal property.
21. Through his sales force, Snisky and Arete raised at least $3.8 million from more
than   40   investors,   in   eight   different   states.      The   majority   of   these   funds   were

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commingled  in  Arete’s  primary  bank  account  and  smaller  amounts  were  held  in  other
Arete bank accounts.
22. The  majority  of  investors  in  Arete  used  funds  from  IRAs  or  other  retirement
accounts.    Snisky  used  two  different  self-directed  IRA  companies  as  third-party
administrators  to  allow  such  investments.    The  self-directed  IRA  companies  set  up
accounts for investors and forwarded paperwork and investment funds to Arete.
23. Following the initial influx of investors, Snisky organized at least two seminars at
which  he  met  with  approximately  30  current  investors  and  salespeople.    At  these
meetings, Snisky introduced himself as the “institutional trader” behind Arete’s success
and  reiterated  the  same  misrepresentations  about  the  safety  of  principal,  guaranteed
returns, and use of investor funds that had lured investors into the scheme.
24. In addition, Snisky hand-delivered fraudulent account statements to the investors
attending the seminars which purported to show that their investment was performing as
promised.
25. At  the  time  Snisky  made  these  claims  to  investors,  he  had  not  purchased  any
bonds on their behalf and had, in fact, helped himself to millions of investor funds.
26. Snisky closed these meetings by encouraging investors to spread the word about
Arete.
i. Defendant Snisky Made Material Misrepresentations
27. From    August    2011    through    January    2013,    Snisky    made    material
misrepresentations and omissions to investors regarding the use of investor funds, the

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risk  of  investment,  and  the  return  on  investment  directly  to  investors  and  indirectly to
investors through the sales team he trained.
28. In  addition,  as  the  sole  owner  and  managing  member  of  each  of  the  relevant
entities,  Snisky  exercised  ultimate  authority  over  the  content  and  distribution  of  the
investment  documents  used  by  each  of  the  entities.    Snisky  authored,  reviewed,  and
authorized the various PPMs  and  offering  materials  transmitted  directly  to  investors  or
indirectly  to  investors  through  salespeople.    In  those  documents,  Snisky  made  the
following material misrepresentations:
a. Snisky  claimed  that  Arete  provided  a  guaranteed  annual  return  of  6%  or
7%.    In  fact,  no  returns  were  earned  on  any  investment.    Instead,  Snisky  never
purchased any agency bonds and misappropriated investor funds.
b. Snisky  promised  that  Arete would  pay  an  immediate  10%  bonus  to
compensate  for  any  surrender  charge  or  withdrawal  penalty  assessed  by  an  annuity
upon the transfer of funds to Arete.  In fact, no such bonus was ever paid into investors’
accounts.  Instead, to further his fraudulent scheme, Snisky fabricated investor account
statements with false bonuses.
c. Snisky  claimed  that  investor  funds  would  be  used  to  purchase  “agency
bonds,” described as Ginnie Mae or similar federal government-backed bonds.  In fact,
no such bonds were ever purchased.  Instead, investor funds were misappropriated by
Snisky.
d. Snisky claimed that investor “principal and interest [was] protected by the
Full Faith and Credit of the United States.”  In fact, investors’ principal and interest was

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not  protected  because  Snisky  did  not  use  investor  funds  for  any  such  investment,  nor
could he reasonably make such a claim for any such investment.
e. Snisky  claimed  that  the  returns  and  bonus  paid  by  Arete  were  made
possible  by  Snisky’s  purported  status  and  experience  as  an  “institutional  trader”  who
would purchase agency bonds at a discount and invest the bonds in overnight banking
sweeps.    In  fact,  Snisky  was  not  an  “institutional  trader,”  and  he  did  not  purchase
agency bonds or engage in overnight banking sweeps.
29. Snisky was aware of the false nature of the statements in the PPMs and made by
the  salespersons,  to  whom  he  provided  all  the  substantive  information  regarding  the
investment.  Snisky knew that he did not purchase agency bonds and did not engage in
overnight   banking   sweeps.      Additionally,   Snisky   knew   that   funds   were   being
misappropriated  because  he  controlled  the  bank  accounts  and  the  movement  of
investor funds.
ii.   Snisky Engaged in a Scheme to Defraud
30. Snisky  engaged  in  deceptive  acts  and  a  course  of  business  that  operated  as  a
fraud.  Snisky engaged in the following acts in furtherance of the fraudulent scheme:
a. Snisky is the architect of the offering.
b. Snisky provided training to the salespersons.
c. Snisky  e-mailed and  mailed  to  salespersons  and  investors  PPMs  and
related offering materials   that he knew contained false and misleading statements.
d. Snisky   transmitted   fictitious   periodic   statements   to   salespeople   and
investors.

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e. Snisky misappropriated investor funds for personal use.
B.  Snisky Engaged in an Unregistered Distribution
31. The  interests  in  Arete,  CMG5,  CMG10,  Summit  5,  and  Summit10  offered  and
sold to investors were securities.
32. Under  the  agreement  with  Arete  and  the  other  pooled  vehicles  and  related
representations,  investors  expected  to  earn  a  guaranteed  6%  or  7%  annual  return
derived from Snisky’s efforts in purchasing government agency bonds at a discount and
using   these   bonds   in   overnight   banking   sweeps.      The   investors’   success   was
interwoven   with   and   solely   dependent   upon   the   efforts   and   success   of   Snisky
purchasing  these  government  agency  bonds  and  engaging  in  these  banking  sweeps.
Snisky had exclusive control over the use of investor funds, which were commingled in
an  Arete  bank  account.    Investors  had  no  voting,  veto,  or  other  powers  under  their
Contribution Agreements.
33. Snisky  offered  and  sold  the  securities  of  Arete,  CMG5,  CMG10,  Summit  5,  and
Summit10 through the use of the internet and the mails.
34. No  registration  statement  was  in  effect  or  had  been  filed  as  to  any  of  those
securities.
35. Arete,  CMG5,  CMG10,  Summit5,  and  Summit10  were  all  under  the  common
control   of   Snisky.      Snisky   disregarded   the   separate   corporate   existence   of   the
companies.    In  addition,  Arete,  CMG5,  CMG10,  Summit5,  and  Summit10  were  all
engaged in the same type of business – acting as pooled investment vehicles by which
investors invested funds for the Arete investment.  And Snisky commingled the assets

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of Arete,  CMG5,  CMG10,  Summit5,  and  Summit10,  depositing  all  invested  funds  in
Arete’s bank accounts.
36. The sales of Arete, CMG5, CMG10, Summit5, and Summit10 securities were all
part  of  a  continuous  offering  from  August  2011  to  January  2013.    They  each involved
the same type of security - membership interests in the companies.  They each required
a  cash  investment.    The  proceeds  of  the  all  the  offerings  were  purportedly  used to
purchase agency bonds.
37. Neither  Snisky  nor  his  companies  had  a  personal  or  business  relationship  with
most  of  their  investors  prior  to  the  offering.    In  addition,  the  investors  did  not  have
access to correct financial information about the Arete investment prior to investing.  At
least some of the investors were unsophisticated and did not understand the risks of the
investment.    Moreover,  in  most  instances,  neither  Snisky  nor  his  salespeople  had  a
reasonable basis to believe otherwise.
38. Snisky  and  his  sales  force  engaged  in  a  general  solicitation.    At  seminars
conducted  by  Snisky,  he  encouraged  attendees  to  provide  information  about  Arete  to
others.    Similarly,  Snisky’s  sales  force  informed  new  potential  customers  about  the
opportunity to invest in Arete.
C.  Snisky Acted as an Unregistered Broker-Dealer
39. As  alleged  above,  Snisky  offered  and  sold  the  securities  of  Arete,  CMG5,
CMG10, Summit5, and Summit10 through the use of the internet and the mails.

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40. At the time he offered and sold the securities of Arete, CMG5, CMG10, Summit5,
and Summit10, Snisky was not a registered broker-dealer nor was he associated with a
registered broker-dealer.
41. Snisky received compensation, in the form of investor funds he misappropriated,
for   each   transaction   in   the   securities   of   Arete,   CMG5,   CMG10,   Summit5,   and
Summit10.
D.  Snisky was an Investment Adviser
42. Arete,   CMG5,   CMG10,   Summit5,   and   Summit10 were   pooled   investment
vehicles.    Snisky  created  Arete,  CMG5,  CMG10,  Summit5,  and  Summit10 for  the
express  purpose  of  raising  capital  from  individual  investors  to  be  pooled  and  used  for
trading in agency bonds.  Each of these funds was an internally managed fund that did
not  employ  an  outside  investment  adviser.    Investors  in  each  of  these  funds  did  not
have  a  right  to  participate  in  the  management  of  the  funds,  leaving  Snisky  as  the  sole
managing member with total control.
43. Snisky acted as an investment adviser to Arete, CMG5, CMG10, Summit 5, and
Summit10.    Snisky  was  responsible  for  all  investment  decisions  for  the  funds.    Snisky
received compensation  for  managing  the  funds,  in  the  form  of  investor  funds  he
misappropriated.
44. Snisky   defrauded   Arete,   CMG5,   CMG10,   Summit   5,   and   Summit10   by
misappropriating  their  assets.    Snisky  also  made  false  and  misleading  statements  and
defrauded investors and prospective investors in Arete, CMG5, CMG10, Summit 5, and
Summit10.

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E.  Arete, CMG5, CMG10, Summit5, and Summit10 Failed to Register as Investment
Companies

45. Snisky  described  Arete,  CMG5,  CMG10,  Summit5,  and  Summit10  as  being
engaged  in  the  business  of  investing  and  trading  in  securities.    Their  securities  were
sold in public offerings to individuals who were not “qualified purchasers.”
46. Arete,  CMG5,  CMG10,  Summit5,  and  Summit10  were  required  to  register  as
investment companies, but failed to do so.
47. As the managing member of these entities, Snisky was responsible for ensuring
that Arete, CMG5, CMG10, Summit5, and Summit10 register as investment companies,
yet he failed to take those necessary steps.
F.  Snisky Profited From his Scheme
48. Snisky controlled Arete’s bank accounts and therefore had access to and control
over all of the investor funds.
49. From February 2012 to May 2012, Snisky misappropriated almost $2.8 million of
the  more  than  $3.8  million  raised  from  investors.    Snisky  withdrew  more  than  $2.7
million  of  that  sum  in  cash.    Snisky  used  investor  funds  for  personal  use,  including  to
pay  his  home  mortgage.    None  of  the  funds  raised  from  investors  were  ever  used  to
purchase any government agency bonds or any other securities or investments.

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VI. CLAIMS FOR RELIEF
FIRST CLAIM
Unregistered Sale of Securities
Violations of Sections 5(a) and 5(c) of the Securities Act
[15 U.S.C. §§ 77e(a) and e(c)]
50. As a result of the conduct alleged in paragraphs 31 through 38 defendant Snisky
has,  directly  or  indirectly,  in  the  absence  of  an  applicable  exemption,  while  no
registration  statement  was  in  effect,  made  use  of  the  means  or  instruments  of
transportation or communication in interstate commerce or of the mails to sell securities
in violation of Section 5(a) of the Securities Act.
51. As a result of the conduct alleged in paragraphs 31 through 38 defendant Snisky
has,  directly  or  indirectly,  in  the  absence  of  an  applicable  exemption,  made  use  of  the
means  or  instruments  of  transportation  or  communication  in  interstate  commerce  or  of
the  mails  to  offer  to  sell  securities,  while  no  registration  statement  had  been  filed  with
the Commission in violation of Section 5(c) of the Securities Act.
52. Unless  restrained  and  enjoined,  defendant  Snisky  will,  in  the  future,  violate
Sections 5(a) and 5(c) of the Securities Act.
SECOND CLAIM
Fraud in the Offer or Sale of Securities
Violations of Section 17(a) of the Securities Act
[15 U.S.C. § 77q(a)]
53. As a result of the conduct alleged in paragraphs 1 through 26, 30 and 48 through
49,  defendant  Snisky  has,  directly  or  indirectly,  with  scienter,  in  the  offer  or  sale  of
securities,  by  use  of  the  means  or  instruments  of  transportation  or  communication  in

15

interstate  commerce  or  by  use  of  the  mails,  employed  a  device,  scheme,  or  artifice  to
defraud in violation of Section 17(a)(1) of the Securities Act.
54. As  a  result  of  the  conduct  alleged  in  paragraphs  1  through  29  and  48  through
49,, defendant Snisky has, directly or indirectly, in the offer or sale of securities, by use
of the means or instruments of transportation or communication in interstate commerce
or  by  use  of  the  mails  obtained  money  or  property  by  means  of  untrue  statements  of
material  fact  or  by  omitting  to  state  material  facts  necessary  to  make  the  statements
made,  in  light  of  the  circumstances  under  which  they  were  made,  not  misleading  in
violation of Section 17(a)(2) of the Securities Act.
55. As a result of the conduct alleged in paragraphs 1 through 26, 30 and 48 through
49,  defendant  Snisky  has  engaged  in  transactions,  practices,  or  courses  of  business
which have been or are operating as a fraud or deceit upon the purchasers of securities
in violation of Section 17(a)(3) of the Securities Act.
56. Unless  restrained  and  enjoined  defendant  Snisky  will,  in  the  future,  violate
Section 17(a) of the Securities Act.
THIRD CLAIM
Fraud in the Purchase or Sale of Securities Through a Scheme to Defraud
Violations of Section 10(b) and Rules 10b-5(a) and 10b-5(c) of the Exchange Act
[15 U.S.C. § 78j(b) and 17 C.F.R. §§ 240.10b-5(a) and (c)]
57. As  a  result  of  the  conduct  alleged  in  paragraphs  1  through  26,  30  and  48
through  49,  defendant  Snisky  has,  directly  or  indirectly,  with  scienter,  by  use  of  the
means or instruments of interstate commerce or by use of the mails, used or employed,
in connection with the purchase or sale of securities, a manipulative or deceptive device
or  contrivance  in  contravention  of  the  rules  and  regulations  of  the  Commission  or

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employed devices, schemes, or artifices to defraud, in violation of Section 10(b) of the
Exchange Act and Rule 10b-5(a) thereunder.
58. As  a  result  of  the  conduct  alleged  in  paragraphs  1  through  26,  30  and  48
through  49,  defendant  Snisky  has,  directly  or  indirectly,  with  scienter,  by  use  of  the
means or instruments of interstate commerce or by use of the mails, in connection with
the  purchase  or  sale  of  securities,  engaged  in  acts,  practices,  or  courses  of  business
which  operated  or  would  operate  as  a  fraud  or  deceit  upon  any  person  in  violation  of
Section 10(b) of the Exchange Act and Rule 10b-5(c) thereunder.
59. Unless  restrained  and  enjoined  defendant  Snisky  will,  in  the  future,  violate
Section 10(b) of the Exchange Act and Rules 10b-5(a) and 10b-5(c) thereunder.
FOURTH CLAIM
Fraud in the Purchase or Sale of Securities Using a Misrepresentation or Omission
Violations of Section 10(b) and Rule 10b-5(b) of the Exchange Act
[15 U.S.C. § 78j(b) and 17 C.F.R. § 240.10b-5(b)]
60. As a result of the conduct alleged in paragraphs 1 through 29, defendant Snisky
has, directly or indirectly, with scienter, by use of the means or instruments of interstate
commerce or by use of the mails, in connection with the purchase or sale of securities,
made untrue statements of material fact or omitted to state material facts necessary in
order to make the statements made, in light of the circumstances under which they were
made,  not  misleading  in  violation  of  Section  10(b)  of  the  Exchange  Act  and  Rule  10b-
5(b) thereunder.
61. Unless  restrained  and  enjoined  defendant  Snisky  will,  in  the  future,  violate
Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder.

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FIFTH CLAIM
Offers and Sales of Securities by an Unregistered Broker-Dealer
Violations of Exchange Act Section 15(a)
[15 U.S.C. § 78o(a)]
62. As a  result  of  the  conduct  alleged  in  paragraphs  39  through 41  and  48  through
49, defendant Snisky has, while not registered as or associated with a broker or dealer
made  use  of  the  means  or  instruments  of  interstate  commerce  to  induce  or  attempt  to
induce the purchase or sale of a security in violation of Section 15(a) of the Exchange
Act.
63. Unless  restrained  and  enjoined  defendant  Snisky  will,  in  the  future,  violate
Section 15(a) of the Exchange Act.
SIXTH CLAIM
Fraud by an Investment Advisor
Violations of Section 206(1), (2) and (4) and Rule 206(4)-8 of the Advisers Act
[15 U.S.C. §§ 80b-6(1), (2) and (4) and 17 C.F.R. § 275.206(4)-8]
64. As  a  result  of  the  conduct  alleged  in  paragraphs  1  through  30,  42  through  44,
and  48  through  49,  defendant  Snisky,  while  acting  as  an  investment  adviser,  has,
directly  or  indirectly,  with  scienter,  by  use  of  the  means  or  instruments  of  interstate
commerce or  by  use  of  the  mails,  employed  a  device,  scheme,  or  artifice  to  defraud
clients and prospective clients in violation of Section 206(1) of the Advisers Act.
65. As a result of the conduct alleged in paragraphs 1 through 30 and 42 through 44,
defendant  Snisky,  while  acting  as  an  investment  adviser,  has,  directly  or  indirectly,  by
use of the means or instruments of interstate commerce or by use of the mails, engaged
in  transactions,  practices,  or  courses  of  business  which  operated  as  a  fraud  or  deceit
upon clients and prospective clients in violation of Section 206(2) of the Advisers Act.

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66. As  a  result  of  the  conduct  alleged  in  paragraphs  1  through  30,  42  through  44,
and  48  through  49,  defendant  Snisky,  while  acting  as  an  investment  adviser,  has,
directly  or  indirectly,  by  use  of  the  means  or  instruments  of  interstate  commerce  or  by
use  of  the  mails,  engaged  in  acts,  practices,  or  courses  of  business  which  are
fraudulent,  deceptive  or  manipulative  in  violation  of  Section  206(4)  of  the  Advisers  Act
and Rule 206(4)-8 thereunder.
67. Unless  restrained  and  enjoined  defendant  Snisky  will,  in  the  future,  violate
Section 206 of the Advisers Act.
SEVENTH CLAIM
Aiding and Abetting Transactions by an Unregistered Investment Company
Violations of Investment Company Act Section 7(a)
[15 U.S.C. § 80a-7(a)]
68. As  a  result  of  the  conduct  alleged  in  paragraphs  45 through 47,  Arete,  CMG5,
CMG10, Summit5, and Summit10, while not registered with the Commission, directly or
indirectly  offered  for  sale,  sold,  and  delivered  after  sale,  by  use  of  the  mails  or  other
means  or  instrumentality  of  interstate  commerce,  a  security  or  interest  in  a  security  in
violation of Section 7(a) of the Investment Company Act.
69. Defendant Snisky, knowingly or recklessly, provided substantial assistance to the
violations of the Investment Company Act listed above.
70. Unless restrained and enjoined defendant Snisky will, in the future, aid and abet
violations of Section 7(a) of the Investment Company Act.
VII. PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that this Court:
I. Find that defendant Snisky committed the violations alleged;

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II. Enter an Injunction, in a form consistent with Rule 65(d) of the Federal Rules of
Civil Procedure, permanently restraining and enjoining defendant Snisky, his agents,
employees, and all persons in active concert or participation with them, from violating,
directly or indirectly, the laws and rules alleged in this Complaint;
III. Order that defendant Snisky disgorge all ill-gotten gains, including pre- and post-
judgment interest, in the form of any benefits of any kind received as a result of the acts
and courses of conduct in this Complaint;
IV. Order that defendant Snisky pay civil penalties, including post-judgment interest,
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], Section 21(d) of the
Exchange Act [15 U.S.C. § 78u(d)] and Section 209(e) of the Adviser’s Act [15 U.S.C. §
80b-9(e)]; and
V. Order such other relief as is necessary and appropriate.

Respectfully submitted this 21
st
 day of November, 2013.

/s Polly Atkinson
Polly Atkinson
Attorney for Plaintiff
Securities and Exchange Commission
1801 California Street
Suite 1500
Denver, Colorado 80202
Telephone: (303) 844-1000
Facsimile: (303) 844-1068
[email protected]