Ohio Department of Commerce Highlights Risk of Private Securities Following Investment Executive’s Guilty Plea

COLUMBUS, Ohio - Following the recent guilty plea of Northwest Capital executive Richard Scheich to multiple felony counts, the Ohio Department of Commerce Division of Securities reminds Ohio investors to be cautious when investing in private securities.

Unlike traditional investments, a private placement is a securities offering that is not required by law to be registered with federal or state securities regulators. Private placements allow companies to sell stocks, bonds or other securities to investors without completing the rigorous disclosures necessary in a registered offering. As in this case, while individuals might be licensed to sell securities, investing in private securities can represent a heightened risk since they are not filed with nor reviewed by regulators.

"Even when working with a licensed professional, investors should always exercise due diligence and caution when investing in private offerings," said Ohio Securities Commissioner Andrea Seidt. "The Division of Securities is committed to protecting Ohio investors and holding accountable those who violate the law. While victims of fraud might be eligible for partial restitution through the Ohio Investor Recovery Fund, the best way to protect yourself and your assets is to avoid falling victim in the first place."

Before investing, the Division always encourages potential investors to call its Investor Protection Hotline at 877-683-7841 to ask the following questions:

• Is the securities professional, platform, or firm properly licensed to do business in Ohio?
• Is the security being promoted by the firm, platform, or the professional registered for sale in Ohio?
• Are there any enforcement actions involving the firm, professional, platform, or securities product being promoted?

Ohioans with any questions or concerns about investments or financial advisors should contact the Division of Securities at 614-644-7381, securitiesgeneral.questions@com.ohio.gov, or by completing its online contact form here.

Scheich, an executive implicated in the alleged decade-long Northwest Capital Ponzi scheme, pleaded guilty yesterday to multiple felony counts in Lucas County Common Pleas Court. The case is the result of a multi-year investigation led by the Division and the Ohio Attorney General's Bureau of Criminal Investigation. From January 2011 to December 2021, managers at Northwest Capital in Toledo and other co-defendants allegedly misled investors about conflicts of interest, the financial health of the affiliated entities, and the true value of the investments. Funds were allegedly manipulated to create the illusion of success, and investors received falsified annual statements.

In court, Scheich admitted to two counts of conspiracy to engage in a pattern of corrupt activity and three counts of the sale of unregistered securities. His actions allegedly defrauded investors of nearly $9 million in investments, contributing to a larger $72 million alleged fraudulent scheme. As part of his plea, Scheich has agreed to cooperate with ongoing investigations and testify against co-defendants involved in the case.

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About the Division of Securities
The Division of Securities is part of the Ohio Department of Commerce. The department is Ohio's chief regulatory agency, focused on promoting prosperity and protecting what matters most to Ohioans. We ensure businesses follow the laws that help them create jobs and keep Ohioans safe. To learn more about what we do, visit our website at com.ohio.gov.