SEC says suicide broker bilked big-time college coaches

The U.S. Securities and Exchange Commission sued the estate of J. David Salinas, an investment manager who committed suicide last month, claiming his companies ran a Ponzi scheme, selling investors bonds that didn't exist. Salinas, through his companies Select Asset Management and J. David Group, defrauded investors of more than $50 million from 2004 to the present, the SEC said in a complaint filed yesterday in federal court in Houston. The agency also sued Brian A. Bjork, chief investment officer of Select Asset. “Bjork and Salinas promised investors safe, fixed-income by investing in highly rated corporate and other bonds with annual yields up to 9 percent,” the SEC said. “In reality, the J. David Group corporate bond offering was bogus.” The investors included numerous college basketball coaches including Lute Olson, former coach at the University of Arizona, and Scott Drew, coach at Baylor University. Salinas was a founder of an elite high school summer basketball program in Houston and a donor to college sports programs. The SEC asked the court to freeze assets of the estate, the companies and Bjork “to ensure the eventual return of the assets to their rightful claimants.” U.S. District Judge Keith P. Ellison granted that request and set a hearing for Aug. 10. Ellison also ordered the defendants and anyone working with them not to destroy records related to the transactions or assets. “Our enforcement action seeks to put an end to an alleged scam that took millions of dollars from more than 100 investors,” said Robert Khuzami, director of the SEC's enforcement division. “Brian has been supplying information and documents to the SEC but has not himself been interviewed,” Matt Hennessy, Bjork's attorney, said in a phone interview. “At this point, Brian plans to continue to cooperate with the investigation,” he said. Salinas, 60, was found dead of a gunshot wound on July 17 at his home in the Houston suburb of Friendswood, Texas. Kathleen Galloway, an SEC attorney, said in yesterday's filing that a Galveston County prosecutor told her July 17 that the death was “apparently a suicide.” --Bloomberg News--