SAN JOSE -- A federal grand jury this week indicted two Scotts Valley investment advisers and a third person they say received more than $60 million from investors but diverted half of the money to themselves and private companies in which they held an interest.

Indicted by a grand jury in San Jose were John Geringer and Christopher Luck of Scotts Valley along with Keith Rode of Franklin, Wis.

The three men are alleged to have been partners in an investment company called Geringer, Luck and Rode LLC, which managed an investment fund called GLR Growth Fund. Geringer was the managing partner.

In a criminal complaint, the three are accused of "engaging in a scheme, plan and artifice to defraud investors and to obtain money and property by means of materially false and fraudulent pretenses."

Federal authorities allege the men created the false appearance that the investors' funds were primarily invested in publicly traded securities. In reality, most of the money was invested in two startup companies, MediaTile and DDNI, in which the three held an interest. Geringer, Rode and Luck are due in court on the charges in Jan. 17.

There is also a pending civil suit in federal court, filed by the U.S. Securities and Exchange Commission earlier this year. The SEC accuses Geringer of the same wrongdoing, alleging he deceived investors into thinking the fund was earning double-digit returns, when it really had generated substantial losses for years.


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Rode and Luck were not named in the civil suit initially but the SEC has now added them to the complaint. The SEC alleges that Geringer told Luck and Rode in 2009 that he'd been lying to them about the balances in the fund's trading accounts, but Luck continued to solicit new investors and Rode continued to mail misleading mail account statements.

"Luck and Rode knew Geringer had squandered millions of dollars in investor funds and were uniquely positioned to stop the fraud in its tracks," said Marc Fagel, director of the SEC's San Francisco Regional Office. "Rather than expose Geringer, they instead chose to join forces and pretend it was business as usual, further concealing the fraud from investors."

The next court date in the civil case is Feb. 13, according to court records.

Follow Sentinel reporter Jessica M. Pasko on Twitter at Twitter.com/jmpasko96