Lisle's Capital Management Accused of Defrauding Clients

A Securities and Exchange Commission fraud complaint has been filed against Capital Management Associates Inc. of Lisle, an investment advisory firm run by Charles J. Dushek and his son Charles S. Dushek, the Daily Herald reports.

According to the paper, the SEC complaint alleges that the Dusheks netted $2 million in unlawful profits by running a "cherry-picking" scheme from 2008 to 2012 in which they defrauded clients by assigning profitable trades to their own accounts—and dumping losing trades onto clients, frequently senior citizens.

The paper quoted an SEC release claiming that the firm "placed millions of dollars in securities trades without designating in advance whether they were trading personal or client funds."

The release also said that the profits were used to pay for the Dusheks' vacation travel and payments on luxury homes and vehicles, according to the paper.

"The Dusheks monitored market prices in the meantime, and waited to see if the trades were profitable before allocating the trades to the clients or to themselves," Courthouse News Service quoted the SEC alleging. "By the time they allocated the securities, the Dusheks knew whether the trades were profitable.

"The Dusheks ultimately kept most of the winning trades, and allocated most of the losses to the clients. They assigned a disproportionate percentage of the profitable trades to themselves, and a disproportionate percentage of the unprofitable trades to the clients.

Capital Management has been in business in Lisle since 1995. Dushek Sr.'s wife Margaret has also been named as a relief defendant, CNS said.

Read more at the Daily Herald website and at Courthouse News Service.

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