Ex-Marine Hedge Fund Manager Clayton Cohn Sentenced to 52 Months for Pocketing Investors' Money

Case from 2016–2017 (U.S. Attorney's Office release: May 19, 2016; later developments are from court records and other sources cited below). Published on Scammers.com Oct. 16, 2026; case status is current as of that date.

Clayton Andrew Cohn, who controlled Chicago-based Marketaction Inc., Marketaction Advisors LLC and the hedge fund Marketaction Capital Management LLC, was charged in May 2016 with wire fraud for allegedly pocketing most of his clients' money instead of investing it. Prosecutors said about 37 investors lost more than $1.5 million between 2010 and 2013 [1].

Outcome: Cohn pleaded guilty on July 5, 2016. On Jan. 24, 2017, U.S. District Judge Jorge L. Alonso sentenced him to 52 months in prison and two years of supervised release and ordered him to pay $1.55 million in restitution, according to the Securities and Exchange Commission [2]. The SEC said his victims included many veterans and some Marines who had served with him [2].

How the scheme worked

According to the criminal information, as described by prosecutors [1]:

1. The pitch: Cohn told prospective investors his firms were thriving on particular trading strategies and held stakes in numerous private-equity investments. In reality there was very little investment activity.
2. Easy exits: He said redemptions would be "simple" and "easy" and available monthly.
3. Fake numbers: He sent account statements that falsely stated the value of investor accounts.
4. Phantom oversight: He falsely claimed Marketaction used a "fund accountant" to value the fund and an "auditor" to inspect it every year, and he filed false and misleading reports with the SEC about annual audits.

The SEC alleged that Cohn invested less than half the money he raised and spent more than $400,000 on personal expenses, including a Hollywood mansion, a luxury car and nightclub tabs, while sending statements claiming annual returns of more than 200 percent [2].

The person charged

Clayton Andrew Cohn, of Chicago (29 when charged)

• SEC action (Aug. 6, 2013): The SEC obtained an emergency court order halting the hedge fund scheme. The civil case was stayed pending the criminal case [2].
• Information (May 19, 2016): one count of wire fraud [1].
• Plea (July 5, 2016): guilty [2].
• Sentence (Jan. 24, 2017): 52 months in prison, two years of supervised release and $1.55 million in restitution [2].
• Investigation: FBI Chicago, with help from the SEC [1].

Red flags

• A manager who leans on shared background, such as military service, instead of documents.
• Returns that are far too high, like the 200-percent-plus annual gains on Cohn's statements.
• "Auditors" and "fund accountants" you can't name or contact.
• A lavish lifestyle offered as proof of trading success.

What to do if you're targeted

1. Look up the adviser and fund on the SEC's Investment Adviser Public Disclosure site and FINRA BrokerCheck.
2. Contact the auditor yourself, using contact details you find independently, to confirm it actually audits the fund.
3. Report suspected investment fraud to the SEC at sec.gov/tcr and to the FBI at tips.fbi.gov.

Case status (as of Oct. 16, 2026)

Defendant	Court	Status as of Oct. 16, 2026	Source
Clayton Andrew Cohn, Chicago	N.D. Ill. (Judge Alonso)	Charged May 19, 2016; pleaded guilty July 5, 2016, to wire fraud; sentenced Jan. 24, 2017, to 52 months, 2 years' supervised release, $1.55 million restitution	[1], [2]

Sources

1. U.S. Attorney's Office, Northern District of Illinois, "Chicago Investment Advisor Charged with Fraud for Allegedly Misappropriating More Than $1.5 Million in Client Funds," May 19, 2016. https://www.justice.gov/usao-ndil/pr/chicago-investment-advisor-charged-fraud-allegedly-misappropriating-more-15-million
2. U.S. Securities and Exchange Commission, Litigation Release No. 23733, "Ex-Marine Hedge Fund Manager Sentenced to 52 Months in Prison for Scheme That Targeted Fellow Veterans," Jan. 30, 2017. https://www.sec.gov/enforcement-litigation/litigation-releases/lr-23733

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