Risk & Compliance

Fund Adviser Accused of $229K Expenses Fraud

The SEC says a former Apollo Management senior partner billed PE fund clients for personal expenses including family vacations and spa visits.
Matthew HellerOctober 25, 2017

A former senior partner at Apollo Management has been charged with defrauding private-equity fund clients he advised by billing them for about $290,000 in personal expenses, including family vacations and visits to a hair salon.

The U.S. Securities and Exchange Commission said Mohammed Ali Rashid, 41, fraudulently charged more than 1,000 personal items and services to clients from at least January 2010 to June 2013 and persisted in his misconduct even after being told by Apollo’s CFO to stop.

The CFO “told Rashid that billing personal expenses to the private equity funds was not acceptable and instructed him not to repeat the conduct,” the SEC said in a civil complaint.

Rashid, who left Apollo in February 2014, has repaid the firm for all the improperly allocated expenses but the commission is seeking an injunction and civil penalties.

“As alleged in our complaint, despite earning millions of dollars, Rashid used client money to fund his lifestyle and personal expenses, including family vacations, designer clothing, and spa services,” Anthony Kelly, co-chief of the SEC Enforcement Division’s Asset Management Unit, said in a news release. “Rashid knew what he was doing was wrong because he took active steps to conceal his misconduct.”

Rashid joined Apollo in August 2000, rising to senior partner, and during the time of the alleged embezzlement was an adviser to five Apollo funds.

“[B]y at least 2010, Rashid began misappropriating the private equity funds’ money by submitting false expense reports to obtain reimbursement for claimed business expenses,” the SEC alleged.

On one occasion, Rashid allegedly claimed more than $1,100 in reimbursement from two funds for business-related meals when, in fact, he had spent the money on visits to a hair salon. A suit for his father from a high-end men’s clothing store was allegedly billed as $3,500 in holiday gifts for executives of companies in which Apollo funds had invested.

Another $7,500 in airfare and hotel charges that Rashid expensed for a business trip to Dallas actually paid for a vacation he and his wife took to attend a friend’s wedding in Hawaii, the SEC said.