Feds charge phony fund manager in $5.6M scam

NOKOMIS — The U.S. Securities and Exchange Commission charged Steven Zoernack, of Nokomis, with fraud for “hiding his checkered past while providing false and misleading data to investors and an independent research firm,” according to a statement.

From May 2010 to March 2014, Zoernack and his company, EquityStar, sold at least $5.6 million of interests in a pair of private investment funds to more than 40 investors, the statement says. He secretly withdrew more than $1 million from those funds without informing investors, according to the statement.

Zoernack and the company also took extensive measures to hide his background, which includes two fraud convictions, a bankruptcy filing and other money judgments against him. According to the statement, he hired a firm to manipulate search results on his name by flooding the Internet with misleading information indicating he was a successful fund manager and investor.

Other accusations against Zoernack include:
• He used at least three false identities while communicating with investors to make EquityStar sound like more than a one-man firm;
• He provided false and misleading date to Morningstar Inc. to obtain a five-star rating;
• He created and distributed false investment marketing materials including hypothetical results.

Additionally, neither Zoernack nor his funds were registered with the SEC or any state regulator, the statement says. A public hearing before an administrative law judge will be scheduled for Zoernack and EquityStar.