New London man to settle with SEC for $1M

He is charged with using investors’ funds to pay for a lavish lifestyle

New London — A New London man charged with mishandling investors’ money is finalizing details of a more than $1 million settlement with the Securities and Exchange Commission.

Federal court records show David Haddad, the founder of a nonprofit animal rescue shelter and owner of multiple New London homes, reached the settlement in January with plans to disburse the money to a host of investors.

The settlement, in which Haddad does not admit or deny any of the SEC’s allegations, was related to the agency’s claims against Haddad’s New London-based companies Trafalgar Square Risk Management LLC and New England RE LLC.

The SEC claims that between 2012 and 2016, Haddad used proceeds from the companies to fund a lavish lifestyle and accumulate debt instead of using the investors’ money to build and grow the two companies as promised.

Haddad spent more than $16 million from a Trafalgar business account with only about $1.85 million used for business expenses, the SEC claims. Despite earning more than $9.9 million in commissions and fees between 2012 and 2016, the SEC claims bills were paid late, bank accounts frequently were overdrawn and retail and veterinary services accounts repeatedly were frozen.

Haddad spent $5 million on real estate and $1.78 million on arts and antiques while paying for entertainment on his properties, landscaping, dog caretakers, staff and funding for his dog rescue charity — Friday’s Rescue Foundation.

During that time, the SEC claims, he falsely represented to investors their money was being used to grow the companies.

The SEC describes Trafalgar as a sales underwriting consulting and marketing firm specializing in stop-loss insurance, which is insurance purchased over and above employer self-funded insurance for catastrophic claims or high dollar claimants on employer-sponsored employee benefit plans.

SEC said that Haddad, because of financial difficulties, had to raise extra money from investors to make principal and interest payments to other investors and to cover delinquent debts.

In the case of New England RE, which Haddad co-founded in 2014, the SEC claims the prospectus contained misstatements and omitted information for potential investors. The company operated as a reinsurer that would “market, underwrite, and bind stop-loss insurance coverage to self-insured employers,” the SEC said.

The prospectus never informed investors that the company was lending money to Trafalgar.

“The material misstatements and omissions by Haddad, Trafalgar, and New England RE were part of a larger scheme that they perpetrated with an aim of keeping Haddad afloat financially as he chronically spent,” the SEC said.

Haddad, who did not return calls seeking comment, is the founder of New London-based Friday’s Rescue Foundation, which is registered and licensed with the state as a charity. Public records show the Friday’s Rescue Fund Foundation Inc. paid $899,000 for a home at 50 Hillside Drive in New London in April 2016. The group maintains a shelter in Groton, where it rehabilitates and finds homes for cats and dogs.

Attorney John P. D’Ambrosio, who represents Haddad in the case, said Friday’s Rescue Fund Foundation was neither a party to the settlement nor financially liable for any part of the settlement.

“It has continued and will continue to fulfill its mission of helping pair adoptable dogs with loving families in the greater New London area,” D’Ambrosio said in a statement. “Its operation has not been affected by the settlement, and there are no plans to close it.”

Haddad also owns several homes in New London, including 292 Pequot Ave.; 47 Hillside Drive, which he purchased for $595,000 in 2010; and 1000 Ocean Ave., purchased for $1.1 million in 2011. The Ocean Avenue site is listed as the address for Trafalgar.

Public records show Haddad’s taxes total about $65,000 annually and that his taxes are paid.