Death Didn't Stop the SEC: Spartan Trading's Ponzi Scheme and What Investment Advisers Must Know

The three men who ran Spartan Trading Company, LLC are dead — killed in a murder-suicide in a Bloomington, Minnesota parking lot in February 2023. The fraud they perpetrated against their neighbors in Minnesota small towns ended violently before the SEC even got its complaint filed.

The SEC showed up anyway.

TL;DR

• Spartan Trading Company raised $3.7 million from investors for a day-trading fund that was essentially a sham
• Founder Richard Myre and co-operators the Dahmens pocketed over $1.9 million in investor funds while providing fake profit statements
• After the principals died in a 2023 murder-suicide, the SEC continued pursuing the case against their estates
• A new April 2026 litigation release (LR-26528) marks the ongoing recovery effort — a reminder that enforcement doesn’t die with the fraudster

This week the SEC posted litigation release LR-26528, another update in the prolonged effort to recover assets from the Spartan Trading Company case. Three years in. The perpetrators gone. The legal machinery still running.

There are lessons here that go beyond this specific case — for investment advisers, compliance officers, and anyone managing a pooled vehicle.

What Happened at Spartan Trading

In 2019, Richard Myre and brothers Dale and Dominick Dahmen founded Spartan Trading Company, LLC in Minnesota. The pitch was simple: pool your money with us, we’ll day-trade stocks, you keep half the profits. Myre would run the trades. Everyone wins.

That was the story, anyway.

According to the SEC’s June 2023 complaint, Spartan Trading was a sham from the start. Myre made very few actual trades — and the ones he did make often lost money. Meanwhile, the three men helped themselves to investor funds:

To keep the scheme going, Myre sent investors fake “profit” checks and fabricated accounting records showing consistently positive monthly returns. This is textbook Ponzi mechanics: use new investor money to pay early investors, manufacture paper evidence of success, repeat until it collapses.

It raised $3.7 million total. Most of that came from everyday investors in Minnesota small towns — the kind of communities where personal trust substitutes for due diligence.

The Collapse

In February 2023, Myre and the Dahmens met to discuss the fund’s situation. After that meeting, all three were found dead in a pickup truck in Bloomington — authorities ruled it a murder-suicide tied to a dispute over the business.

The SEC, already investigating, filed its complaint in federal court on June 29, 2023 — three months after the founders were dead.

The case continues in 2026.

What the SEC Actually Charged

The complaint names Spartan Trading Company, LLC and the estates of the deceased principals:

Against Spartan Trading and the Estate of Richard Myre:

• Securities Act Section 17(a) — fraud in the offer or sale of securities
• Exchange Act Section 10(b) and Rule 10b-5 — securities fraud
• Investment Advisers Act Sections 206(1) and 206(2) — investment adviser fraud through false statements and omissions
• Investment Advisers Act Section 206(4) and Rule 206(4)-8 — making false statements to investors in a pooled investment vehicle

Against the Estates of Dale and Dominick Dahmen (as relief defendants):

• Named not for direct securities violations, but for disgorgement of profits received from the fraudulent scheme

The “relief defendant” designation matters. It’s the SEC’s mechanism for clawing back fraud proceeds that landed with parties who weren’t themselves charged with wrongdoing — including estates, family members, and related entities that received tainted funds.

Enforcement Doesn’t Stop at Death: The Practical Takeaway

The most striking thing about this case is the obvious one: the SEC is still pursuing it. The principals are dead. The fund is defunct. But investor money is still missing — and the SEC’s job is to get it back.

That has real implications for anyone in the investment adviser space.

Estates inherit both assets and liabilities. If a principal dies holding proceeds of fraud, those proceeds can be subject to disgorgement in a federal court action. Death doesn’t extinguish the obligation to return stolen money. Estate attorneys, fiduciaries, and successor trustees need to understand that unresolved regulatory exposure follows assets.

The SEC doesn’t close cases because people died. The statute of limitations keeps running, investigations continue, and recoveries are pursued regardless of whether anyone’s alive to answer for the conduct. This is especially relevant for small firms where “the compliance officer is the founder” — if something goes wrong and the principal is gone, there’s no one left to clean it up.

There’s no such thing as a “clean exit” from a fraud. The Spartan Trading scheme didn’t end when the men died. It ended — slowly, bureaucratically — in federal court in Minnesota. The investors are still waiting.

Control Failures That Made This Possible

This wasn’t sophisticated fraud. The mechanics were simple, and the red flags were obvious in retrospect. Three control failures made it work as long as it did:

1. No independent custodian. Legitimate investment funds hold client assets at an independent custodian — a broker-dealer or bank that holds and verifies the securities. Spartan Trading had no such arrangement. Myre controlled the accounts, which meant he also controlled the reporting. There was no third-party check on what was actually in the fund.

2. No audited financials. The accounting records investors received were fabricated by Myre. Had there been an independent annual audit, the discrepancy between reported returns and actual trading activity would have surfaced almost immediately. No audit, no check.

3. No registration. Spartan Trading operated as an unregistered investment adviser. Registration requires disclosures, background checks, ongoing compliance filings, and regulatory examination. None of that existed here. Investors had no way to verify who they were dealing with or whether the fund was subject to any regulatory oversight.

These aren’t exotic controls. They’re basic — the minimum infrastructure that separates a legitimate fund from a fraud. And they were completely absent.

Red Flags Investors (and Compliance Officers) Should Recognize

If you’re reviewing relationships with any investment managers — or if you’re involved in a pooled vehicle of any kind — these are the warning signs:

Consistently positive monthly returns. Legitimate day-trading operations have losing months. Spartan Trading showed investors consistent gains. Markets don’t work that way. Suspiciously smooth performance is a Ponzi tell.

Account statements from the fund itself. Legitimate funds provide statements from an independent custodian. If the only records you get come from the manager, those records can be fabricated.

Pressure against redemptions. If a manager creates friction around withdrawing funds — excuses, delays, fee penalties — that’s a sign the money may not actually be there.

Personal relationships substituting for documentation. Spartan Trading’s investors were neighbors and community members. They trusted Myre personally. That trust replaced the due diligence they should have done. Personal trust is not a compliance control.

Unregistered status. Before investing in any fund or managed account, verify the adviser’s registration through Investment Adviser Public Disclosure (IAPD) or BrokerCheck. If they’re not registered and the fund size should require it, that’s a serious red flag.

For Investment Adviser Compliance Programs: What to Check Monday Morning

If you manage a registered investment adviser or operate in this space, use this case as a gut-check prompt:

Client asset custody:

• Are client assets held at an independent, qualified custodian?
• Are clients receiving account statements directly from the custodian — not just from your firm?
• Do you comply with the SEC’s custody rule (Rule 206(4)-2) if you have custody of client assets?

Performance reporting:

• Are reported returns based on independently verified trade records?
• Do you have a third-party calculation agent for performance?
• Would your performance records survive scrutiny if an examiner asked for trade-by-trade documentation?

Registration and disclosure:

• Is the adviser properly registered with the SEC or relevant state regulator?
• Are Form ADV disclosures current and accurate?
• Do all principals have current registration and background check clearance?

Document your issues. If your firm has ever received a complaint, identified an error, or flagged a potential compliance issue — that needs to be tracked, investigated, and resolved with a paper trail. The Issues Management Tracker exists precisely for this: document the issue, the investigation, the resolution, and the preventive controls put in place.

The Broader Context: SEC Enforcement Isn’t Letting Up

Under the current SEC leadership, the enforcement focus has shifted somewhat — away from technical process violations toward cases involving intentional misconduct and investor harm. The Spartan Trading case fits squarely in that lane: deliberate fraud, real investor harm, misappropriation of millions.

The DOJ’s new National Fraud Enforcement Division is doubling down on exactly this type of financial fraud — coordinating with regulators like the SEC to pursue cases that harm ordinary investors. The era of assuming small-dollar fraud goes unnoticed is over.

Fair lending enforcement has also intensified at the state level — another reminder that compliance gaps don’t stay quiet forever. Regulators, state AGs, and now a reinvigorated DOJ fraud unit are all in the business of finding the same categories of misconduct: misrepresentation, misappropriation, and failure to disclose.

If you manage a pooled vehicle — of any size, at any stage — the Spartan Trading case is a reminder that the enforcement machinery doesn’t care how small you are, how local you are, or whether you’re still alive when it comes looking.

30/60/90-Day Compliance Checklist

Next 30 days:

• Verify independent custodian arrangement for any pooled vehicles
• Confirm clients receive statements directly from custodian
• Pull current registration status from IAPD and confirm it’s accurate

Next 60 days:

• Conduct internal review of performance reporting methodology
• Verify annual custody rule compliance (Rule 206(4)-2 if applicable)
• Review any pending client complaints or issues for proper documentation

Next 90 days:

• Complete annual compliance program review if not done
• Update Form ADV with any material changes
• Document any open issues, investigations, or compliance gaps in an issues log — and close them with evidence of resolution

The three men who ran Spartan Trading are gone. The case is still open. The investors are still waiting. And the SEC is still working.

That’s enforcement. It doesn’t care who started it or who’s left to finish it. The only thing that stops it is recovering what was stolen.

Sources: SEC Litigation Release No. 25767 | SEC Complaint, No. 23-cv-01997 (D. Minn. June 29, 2023) | Bloomberg Law | KARE 11 News | SEC Ponzi Scheme Enforcement Spotlight