B. Douglas Morriss has little use for traditional accounting constraints or regulatory technicalities designed to protect investors.

Questioned recently by Securities and Exchange Commission investigators at the agency's offices in Miami, the Clayton-based financier recalled the instructions he gave his attorneys and accountants in setting up an array of venture capital companies beginning in 2003.

He wanted them "extremely broadly chartered" to allow any kind of financing arrangement 'short of putting the money in a pile in the parking lot and lighting it on fire."

"We just wanted to do whatever we wanted to do … to effect any kind of transaction we wanted to effect," he told the SEC, according to a transcript of the first of two investigative hearings held on Nov. 30 and Jan. 4.

As a result, money tended to slosh back and forth between Morriss' different investment entities — and his personal bank accounts, investigators allege. Morriss told the SEC that he and his family's holding company at times advanced millions of dollars to his venture funds when they required cash, and that he more recently "borrowed" investor funds when his personal accounts ran short.

A huge trove of recently unsealed documents from the SEC investigation into Morriss' companies provides a portrait of a free-spending venture capitalist derailed not only by the Great Recession but by his disdain for conventional business practices and his taste for exotic trips and toys.

In a complaint lodged Jan. 17, the SEC accused Morriss of defrauding investors by using their money to grant $9.1 million in personal loans to himself. The agency claims that, from 2003 to 2011, Morriss and his investment funds raised at least $88 million from about 97 investors.

Morriss and three of his firms — the Acartha Group LLC, Acartha Technology Partners LP, and MIC VII LLC — filed this month for bankruptcy protection, listing more than $35 million in debts and at least 40 creditors.

And a powerful group of Texas investors, including polo-playing millionaire John B. Goodman, sued Morriss in November in St. Louis County Circuit Court in Clayton, saying that he swindled them out of a $10.8 million investment in Morriss' business ventures.

Morriss, 49, declined to comment for this report. Morriss' attorney, Catherine Hanaway, said he has not yet submitted an answer to the SEC's civil suit, but "we're going to very vigorously defend this suit."

During the SEC investigative hearings, he denied any misappropriation of investor funds. Morriss said he was careful to protect his investors. "No one was ever harmed," he said.

'regular expenses'

Morriss has explained to the SEC that the electronic transfers of investor funds went toward "paying bank loans, paying alimony, paying for my household. I have seven kids. You know, regular expenses."

An SEC transcript also reveals that Morriss' close friend and business associate Dixon Brown told SEC investigators on Jan. 5 that Morriss also used these loans to pay for his hunting trips to Africa and elsewhere.

When his former chief financial officer, Chris Aliprandi, asked in June 2006 about a $50,000 disbursement of company funds to Morriss' personal bank account, Morriss fired off a response from his BlackBerry: "Yes Chris and now this very disappointing ass covering memo can be placed in your file, be scanned, taped and whatever else you would like to do," he wrote. "Should I bring my lawyer?"

But while Morriss shunned such accounting formalities, some of his investors and others raised similar concerns.

Jonathan Roberts, a senior vice president at the New York investment management firm of Klingenstein, Fields & Co., invested $500,000 of his clients' money in June 2008 in Gryphon Investments III LLC — a venture capital fund that would focus mainly on technology products for the financial services industry.

According to Robert's sworn affidavit, Morriss, the fund's manager, had personally assured him that Gryphon III was well on its way in mid-2008 of reaching its target of $250 million to $350 million in investor assets.

Two years later, Roberts had grown frustrated with what he characterized as Morriss' lack of response to his repeated requests for financial data about his firm's investment. In October 2010, Roberts said, he learned that Morriss "had only raised approximately $15 million."

Roberts told the SEC that his firm never would have invested in Gryphon III had he known that any portion of the money "would be used for anyone's personal use."

'drinks on the house'

Morriss had trouble keeping track of the dozens of companies he created. Asked by an SEC lawyer whether he is the chief executive and solo shareholder of Morriss Holdings, he responded: "I actually don't know.

"There are so many entities ... I suspect I probably am … I couldn't tell you who the shareholder of Morriss Holdings is," Morris told investigators. "There are so many little LLCs (limited liability companies) and SPVs (special purpose vehicles) around us, I have to go look at a diagram or ask the accountants half the time myself."

Morriss prides himself on his knack for investing in promising startups and his team's expertise in identifying technology products and services.

"The value generally lies with the talent of the people," he told the SEC. "It's not like you're building tennis rackets, where if you build the most efficient model … the machine can punch out tennis rackets at a cheaper price than anybody else. The talent in this case — what you have to buy to make things work — walks in and out of a door every day."

But things didn't work. The financier equated the venture capital market since the end of 2007 to Death Valley, especially for technology investors. "We're in the worst period ever," he said. "It's been a rough ride."

Public records show that many of his financial troubles predated the recession.

One of Morriss' firms, the Chesterfield-based MIC Aircraft LLC, filed for bankruptcy in 2002.

Beginning in "2004 or 2005," Morriss told the SEC, he had to start paying down debt and shedding assets. He gave back an aircraft to CIT bank, and gave up a helicopter he owned, too. He needed to borrow money for his divorce settlement in 2005 or 2006. He sold his farm and his partnership interest in the Canadian hunting club.

"I was a pretty wealthy guy until all that happened," he said. "It's a train wreck."

Among those who say Morriss owes them money is Fred Garcia, who owns an auto restoration shop in Sauget, Ill. Garcia told the Post-Dispatch that Morriss owes him $20,000 for work on his fleet of vintage cars, which at one time included a Lamborghini and several Ferraris. Garcia said that Morriss hired him to restore various cars and also to custom build a '67 Ford Mustang for his then 16-year-old son.

"I really like Doug. I road race motorcycles, and he sponsored me for two years," Garcia said in an interview. "He'd spent money like crazy, and you'd have to chase him around to get paid. I considered him a friend, but he really put me back ... He paid me $16,000 for $36,000 of work. It killed me."

He said that he accompanied Morriss four or five years ago on a day trip to Manhattan. Morriss chartered a jet, and they were met in New York by a limousine that took them to auto showrooms to look at Ferraris. Garcia also said that he went with Morriss to his Canadian hunting lodge and lakeshore property.

"This guy was on 110 full power constantly, but no drugs," said Garcia, adding that Morriss was a big tipper at night clubs. "He was like, drinks were on the house 24 hours a day."

borrowed time

To support himself in recent years, Morriss said, he relied on his salary from Acartha Technology Partners "and what I was able to borrow."

Morris claims that his investors were aware of his personal borrowings from Acartha-related assets because they were disclosed in company audits and offering documents sent to investors.

"They knew it in advance. They knew it while it was happening, and they knew it at the end," he said of the loans. "If they didn't know it, it's because they didn't read it and signed it anyway."

But that testimony was contradicted by a Dec. 21 deposition of Acartha's general counsel, T. Wynne Morriss, who told plaintiff's lawyers in the Texas investors' suit that his boss' personal loans from investor assets were not disclosed to investors.

Some of his investors also said they never knew that Morriss would use their funds for personal loans.

In a sworn affidavit, Edward Labry III said he met Morriss in about 2004 when Labry was a guest at Morriss' hunting club in Canada. Labry ended up investing a total of $6.3 million in three of Morriss' entities.

Despite his repeated requests, Labry told the SEC, Morriss did not provide him with any audited financial statements from Acartha-related entities until December 2011.

Morris told investigators he faced a crucial decision a couple of years ago, when it became clear his team could not raise the kind of money for Gryphon III they had anticipated.

"We had to make a choice," he told the SEC. "You don't have the luxury of just saying, we are going to wind it up and hang up our skis and move on to the next thing. If you do that, you are selling venture assets at distress levels, which means everybody is going to get crushed."

But the decision to limp along proved costly. Morriss' cash reserves ran out at the end of 2008. He fell further behind on his debts, including a $144,000 loan that his firm, Goodwood Partners Motor Sports LLC, a wholesale auto dealer, had taken out on a classic Bentley Arnage sedan. He defaulted on multimillion-dollar personal loans from Wells Fargo Bank and had trouble raising additional investor funds.

More recently, his troubles accelerated. In September, he was subpoenaed by the SEC. By mid-December, he took a leave of absence from Acartha. In early January, he filed bankruptcy papers, and days later, the SEC filed its case against him and froze the assets of the Acartha Group and Morriss Holdings LLC. And the U.S. attorney's office opened a criminal investigation.

Some time ago, Morriss placed his mansion in Ladue on the market for about $4.3 million. The nine-bedroom home, which is owned by the "BDM 2000 Irrevocable Trust," is built around a courtyard with a carriage house and garage that has several bays for Morriss' auto collection.

His personal debts include $3,640 in grocery bills from Straub's and $3,694 to Tom James in Franklin, Tenn., which makes custom, fine-tailored suits.

Through it all, Morriss has hung on to his trademark wit.

"You sell my clothes and that wouldn't get you very far," he told SEC investigators. "Not much call for clothes from short fat guys."