Securities firm owner, late scammer’s trust ordered to cough up $2.7 million

A federal court in Colorado has entered final default judgments against Seth A. Leyton and the Coddington Family Trust in connection with a fraudulent scheme involving collateralized mortgage obligations that was orchestrated by the late Daniel Dirk Coddington.

The court ordered Leyton to pay disgorgement of $176,964, prejudgment interest of $69,374, and a civil penalty of $176,964. It also ordered the Coddington Family Trust to pay disgorgement of $1,591,962 and prejudgment interest of $665,220.

The SEC's complaint, filed in December 2013, alleged that Coddington defrauded investors by soliciting investments in a purported CMO trading program, promising annual returns ranging from 250% to 475%. In fact, the complaint alleged, the trading program did not exist, and the majority of investor money was misappropriated.

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The complaint also alleged that Leyton, the owner of a securities brokerage firm, assisted Coddington by opening brokerage accounts that enabled Coddington to misappropriate investors’ CMOs. The SEC also charged that Coddington transferred those funds to the Coddington Family Trust.

In 2013, the Financial Industry Regulatory Authority Inc. barred Leyton for his actions in connection with the CMO transactions. In that year, Finra also expelled his firm, Viewpoint Securities of San Diego, for aiding and abetting violations of securities laws in connection with those transactions.

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Leyton and the Coddington Family Trust did not answer or otherwise respond to the SEC's complaint. Coddington passed away in January 2019.