Fund managers lived lavishly, SEC says
Filings are latest round in fast-moving court fight
Michael Hull bought three cars for more than $100,000 each during the years he co-managed a nowbeleaguered investment fund that is at the center of U.S. Securities and Exchange Commission lawsuit charging fraud and deceptive practices, newly filed court records state.
Hull — the ex-stock broker who, with his brother, helped steer the nowdefunct Wisconsin Funeral Trust Fund into a $24.5 million shortfall in 2012 — and his new business partner, Christopher Nohl, “have lived lavish lifestyles with the money they withdrew from Greenpoint Tactical Income Fund” that they managed, the SEC said last week in a new set of court filings.
Included in that lifestyle was a $280,000 Bentley Continental bought by Hull as well as a $58,000 sapphire for his wife and a Steinway piano.
“He owns millions of dollars of real estate in Wisconsin and the United Kingdom and financed one of his three homes by taking a personal loan from Greenpoint,” the SEC said.
Meanwhile, Nohl and Chrysalis, a company he founded, “made at least five personal loans to Greenpoint Tactical Investment Fund at annualized rates as high as 104%,” the SEC said.
The SEC filings are the latest round in a fast-moving court fight that started late last month when the federal agency sued Hull, Nohl and three affiliated entities for fraud.
Shortly afterward, Greenpoint Tactical Income Fund, an investment fund managed by Hull and Nohl, filed Chapter 11 bankruptcy to protect it from creditors.
The SEC counterpunched last week by asking the bankruptcy court to appoint a trustee to take control of Greenpoint Tactical and its subsidiary, GP Rare Earth Trading Account.
“This case is replete with specific allegations of fraud, dishonesty and gross mismanagement by Hull, Nohl and their entities,” the SEC charged in asking the court to name a trustee.
If a trustee is appointed, “any fraud that may have been committed would end because there would be a neutral and independent, in all likelihood an attorney, person with no ax to grind” running it, said Jonathan Goodman, a Milwaukee bankruptcy attorney not involved in the case.
Many of the assets in the fund managed by Hull and Nohl were in gems and precious minerals, which the SEC says
were overvalued and not a liquid asset that could easily be turned into cash. A now-closed company involved in a project to remediate oil pollution in Kuwait was also an overvalued key asset of the fund, which was pitched as an investment that would provide income to investors.
All told, the SEC charges that Hull and Nohl “reported inflated asset values of at least $46.2 million as part of their fraudulent scheme.
Hull, Nohl and their attorneys did not return calls from Journal Sentinel.
From 2014-19 Nohl and Hull and their entities raised $52.78 million from 129 investors in 10 states, the SEC said. Hull and Nohl pocketed at least $18 million in fees from the funds, the SEC charged.
Michael Richman, bankruptcy attorney for Greenpoint Tactical, said paying investors could be accomplished without a trustee.
“The goal of the Chapter 11 is to sell assets at fair market value ... to pay allowed claims and other parties,” said Richman, of Madison. “Our hope is to pay the claims in full.”
Nohl, of Milwaukee, and Hull, of Oconomowoc, are named as defendants in the SEC lawsuit. They are not named in the bankruptcy, although they manage Greenpoint Tactical.
The trustee motion contained emails from a handful of investors trying to get their money out of the investment fund.
In September 2017, one investor emailed Hull at his BluePoint Investment Counsel noting he had been trying to withdraw $50,000 for more than six months. The money was needed for various charitable causes, the investor wrote.
“This Wednesday, I’m currently scheduled to start a process which will be one of the lowest points of my life as I begin to have several discussions with individuals and organizations and break our promises of support,” he wrote. “You know how giving is my passion and purpose. I cannot express in words how emotional and depressing this is for me.”
Seven months later the investor told Hull via email he was being forced to sell his home.
“What I need is liquidity,” the investor wrote in April 2018. “That is why I’m selling my house.”
When the investor, whose name was redacted, told Hull his move was “very depressing,” Hull responded three minutes later saying: “Hang in there! ... You know I’m always there for you whatever you need, even if it is just to pack up stuff in boxes.”
Hull, who was fired by Morgan Stanley Smith Barney in 2012, was in the center of the Wisconsin Funeral Trust controversy in 2012. The fund was sold to investors as a low-risk investment to prepay funerals. In reality, however, during the time Hull and his brother Patrick Hull, were advisers to it, the money was poured into high-risk investments such as leveraged hedge funds, futures and private equities.
In 2017, Nohl’s east side home and a vault his company leased to store gems were raided by the FBI. No criminal charges have resulted from that investigation.