SEC Charges California Investment Adviser for Undisclosed Conflicts of Interest Related to Real Estate Ponzi Scheme
April 27, 2022
File No. 3-20835
Real Estate Ponzi Scheme
April 27, 2022 - The Securities and Exchange Commission today charged a Marin, California resident and her investment firm for their roles selling securities in Professional Financial Investors, Inc. ("PFI") and Professional Investors Security Fund, Inc. ("PISF"), two Marin County, California real estate investment and management companies that defrauded investors.
According to the SEC's order, from at least October 2016 through May 2020, California-registered investment adviser, Wealth Plus, Inc. and its sole principal, Alexandra H. Cock, raised more than $2.5 million by selling unregistered securities in PFI and PISF while not being registered as a broker-dealer or associated with a registered broker-dealer. The order finds that PFI and PISF paid Cock, through Wealth Plus, more than $90,000 in referral fees for soliciting investors and recommending PFI and PISF to Wealth Plus's retail advisory clients. In addition, Wealth Plus received approximately $440,000 in advisory fees from clients invested in PFI and PISF. The SEC's order finds that Cock and Wealth Plus failed to disclose accurate and complete information to advisory clients regarding the compensation received from PFI and PISF, and that, for certain advisory clients, Cock and Wealth Plus failed to disclose conflicts of interest they had in recommending PFI and PISF investments.
The SEC order charges Cock and Wealth Plus with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, the broker-dealer registration provisions of Section 15(a) of the Securities Exchange Act of 1934, and Section 206(2) of the Investment Advisers Act of 1940. Without admitting or denying the SEC's findings, Cock and Wealth Plus consented to a cease-and-desist order, Cock agreed to a collateral associational bar and investment company prohibition, Wealth Plus agreed to a censure, and Cock and Wealth Plus agreed to pay disgorgement and prejudgment interest of $368,232 and a civil penalty of $30,000.
The SEC's investigation was conducted by Mike Foley with the assistance of Brent Smyth, under the supervision of Tracy L. Davis and Monique C. Winkler of the San Francisco Regional Office. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of California and the Federal Bureau of Investigation.