SEC Charges Former Advisor with $2 Million Fraudulent Scheme

Posted on November 21st, 2023 at 1:56 PM
SEC Charges Former Advisor with $2 Million Fraudulent Scheme

From the desk of Jim Eccleston at Eccleston Law 

The Securities and Exchange Commission (SEC) has announced the filing of charges against an investment adviser based in Santa Maria, California. Julie Anne Darrah is alleged to have defrauded a minimum of nine elderly female advisory clients, causing losses exceeding $2 million.

As outlined in the SEC's complaint, Julie Anne Darrah and her firm, Vivid Financial Management Inc., are accused of misappropriating approximately $2.25 million from clients who had engaged their services as investment advisers. The complaint asserts that Darrah primarily targeted elderly female advisory clients, many of whom had become dependent on her for their financial well-being. This included one client residing in a memory care facility. The complaint details that Darrah took control of her victims' assets by assuming the role of trustee for their trusts, utilizing standing letters of authorization to transfer funds from their brokerage accounts to their bank accounts, becoming the signatory on their bank accounts, or obtaining power of attorney over their property and accounts.

According to the SEC, Darrah transferred her victims' funds into her bank accounts, mixing these funds with her own money. She utilized this commingled pool of resources for various purposes, including acquiring and enhancing real estate properties, covering personal expenses, purchasing luxury vehicles, and operating restaurant businesses at a financial loss. In an attempt to conceal her fraudulent activities, Darrah altered client account mailing addresses to her address, falsely representing that she was not acting as a trustee for any clients, and had a client initial two backdated promissory notes, which she subsequently provided to the SEC in response to its subpoenas.

The complaint seeks remedies that include the disgorgement of allegedly ill-gotten gains, prejudgment interest, monetary penalties, and the imposition of permanent and conduct-based injunctions. As reported by DIWire, Darrah has consented to a preliminary injunction being issued against her and an order freezing assets, mandating an accounting, prohibiting the destruction of documents, and allowing for expedited discovery.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

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