Chicago Investment Advisor Charged In $4 Million Fraud…

Federal prosecutors and the U.S. Securities and Exchange Commission charged Chicago investment advisor John Sterling Myers in what regulators described as a multi-million dollar investment fraud scheme involving fabricated returns, fake account statements, and catastrophic options trading losses that allegedly wiped out most investor capital. The SEC’s complaint alleged Myers raised approximately $4 million from at least 28 investors through Sterling Capital LLC and Sterling Capital Management LLC between 2022 and 2025 while falsely portraying the operation as a successful private investment fund.

Regulators alleged Myers promised annual returns ranging between 16% and 54% while internally suffering severe trading losses tied to speculative securities and options activity.

The complaint alleged many investors believed they were participating in an exclusive investment operation with institutional-level expertise and stable portfolio performance.

Instead, prosecutors said the fund steadily deteriorated as losses mounted and investor statements became increasingly detached from reality.

SEC Says Investors Received Fake Performance Statements

The SEC complaint alleged Myers routinely distributed fabricated quarterly account statements showing profitable portfolio growth even after substantial portions of investor money had already disappeared.

Investigators said Myers manipulated net asset value calculations by including assets the investment fund did not actually own, including a family member’s home and retirement accounts.

The SEC also alleged Myers recorded hypothetical future income as existing portfolio assets despite not generating meaningful business revenue for years.

According to regulators, the fabricated valuations helped maintain the illusion of profitability while hiding escalating losses from investors.

The complaint further alleged Myers failed to provide accurate tax documentation that would have exposed the fund’s deteriorating condition.

Instead, regulators said he personally claimed trading losses on his own tax returns while investors continued receiving positive account updates and inflated portfolio valuations.

The SEC alleged Myers marketed Sterling Capital as a sophisticated investment operation with a strong performance history and experienced leadership team.

According to the complaint, some executives listed in company materials allegedly had no operational involvement inside the business.

Options Trading Losses Became Central To The Alleged Scam

Unlike many traditional Ponzi schemes where investor repayments rely primarily on incoming capital from new victims, regulators alleged much of the damage in this case came directly from failed trading activity.

The SEC said Myers transferred at least $1.8 million from investor accounts into personal bank and brokerage accounts where he engaged in unsuccessful securities and options trading.

Investigators also alleged investor money funded personal expenses including travel, restaurants, and luxury purchases.

The case highlights growing regulatory concern around speculative options trading strategies marketed through private investment structures.

Retail and semi-private investment pools increasingly used leveraged options strategies during the post-pandemic trading boom as electronic brokerage platforms made short-dated derivatives more accessible to non-institutional participants.

That environment created opportunities for smaller advisory operations to market aggressive trading approaches using selective performance reporting and benchmark comparisons that appeared credible during volatile market conditions.

According to the SEC, Myers continued presenting the fund as profitable even after trading losses severely damaged investor capital.

Investment Fraud Cases Continue To Target Affinity Networks

The Myers case also reflects a broader pattern increasingly visible across investment fraud enforcement actions.

Federal regulators increasingly focused on smaller advisory firms and private investment pools operating through local business relationships, alumni circles, family connections, and affinity-based investor communities where trust often replaces formal institutional oversight.

The SEC alleged many Sterling Capital investors maintained personal relationships with Myers before investing.

That dynamic often allows fraud schemes to persist longer because investors are less likely to question account statements or request independent verification when operators already hold trusted positions inside local communities.

The SEC charged Myers and the Sterling entities with violating antifraud provisions under the Securities Act, the Exchange Act, and the Investment Advisers Act.

The agency is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, civil penalties, and additional equitable relief.

The investigation involved staff from the SEC’s Chicago Regional Office alongside assistance from the U.S. Attorney’s Office for the Northern District of Illinois.

The case adds to a growing number of enforcement actions where regulators allege investment advisors concealed heavy trading losses through fabricated performance reporting rather than immediately admitting portfolio collapse.

While modern financial scams increasingly involve crypto schemes, AI impersonation attacks, and social media manipulation, traditional investment fraud operations tied to fake returns and opaque trading activity continue generating significant losses across U.S. retail investor markets.