SEC charges financier for stealing $43 million in client funds

Jason Sugarman alleged to have directed fraudulent scheme involving Native American tribal bonds

Jun 27, 2019 @ 11:18 am

By InvestmentNews

The Securities and Exchange Commission has charged Jason Sugarman, a Los Angeles financier, with directing a fraudulent scheme to gain control over two registered investment advisers so that he and others could steal $43 million of client funds to purportedly invest in Native American tribal bonds. According to the SEC, Mr. Sugarman and his associates misappropriated the proceeds for their own benefit.

(More:SEC bars Virginia state investment adviser over Ponzi scheme)

The SEC alleges that Mr. Sugarman directed the scheme with Jason Galanis, whom the SEC has previously charged with securities fraud in connection with the tribal bonds scheme.The SEC further alleges that

The latest charges "reflect that orchestrating a scheme from behind the scenes does not insulate someone from liability," said Sanjay Wadhwa, of the SEC's New York office.

The complaint seeks monetary and equitable relief against Mr. Sugarman.

As the Los Angeles Times reported last year, the SEC's inquiry stemmed from trouble at Banc of California, an institution then run by Mr. Sugarman's brother. An anonymous short-seller published a blog post on investment website Seeking Alpha alleging the institution was secretly controlled by Jason Galanis, a Beverly Hills financier with a history of criminal fraud.

(More: SEC bars four 'advisers' for selling unregistered Woodbridge securities)

The post tied Mr. Galanis to Mr. Sugarman, who was a paid adviser to the bank.

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