Common use of Factual Basis Clause in Contracts

Factual Basis. Defendant is pleading guilty because defendant is in fact guilty. The defendant certifies that defendant does hereby admit that the facts set forth below are true, and were this case to go to trial, the United States would be able to prove those specific facts and others beyond a reasonable doubt: Defendant is the managing member of OM Global Investment Fund LLC (the “OM Global Fund”), an unregistered pooled investment vehicle fund formed in 2009. Defendant is also the principal owner and operator of OM Investment Management LLC, a formerly registered investment advisor. Defendant and the OM Global Fund were investment advisers within the meaning of Section 202(a)(11) of the Investment Advisers Act, 15 U.S.C. Section 80-b2(a)(11). Beginning in or about 2011, defendant began soliciting investments for the OM Global Fund by, among other methods, touting its access to pre-IPO shares of Facebook, Inc. By the end of 2012, defendant had secured investments exceeding $15 million for the OM Global Fund. As part of the investments for the OM Global Fund, defendant raised more than $9 million “side pocket” investments based on representations to approximately 130 investors that their investments in the OM Global Fund would be used exclusively for the purchase of shares of Facebook. Contrary to these representations and unbeknown to “side pocket” investors, defendant later sold Facebook shares and thereafter used certain of those funds designated exclusively for the purchase of Facebook shares for other investments. Defendant made material misrepresentations and omissions through OM Investment Management to investors in order to mislead investors about the nature and value of their investment in the OM Global Fund and to conceal from “side pocket” investors that he had used their money for investments other than Facebook. The OM Global Fund lost approximately $9 million before it went into receivership in September 2013.