U.S. Securities and Exchange Commission
LITIGATION RELEASE NO. 21690 / October 7, 2010
Securities and Exchange Commission v. Barbra Alexander et. al., Case No. CV-10-4535-PVT (N.D. Cal. filed Oct. 7, 2010)
SEC CHARGES INTERNATIONALLY SYNDICATED RADIO SHOW HOST WITH SECURITIES FRAUD SCHEME
The Securities and Exchange Commission today charged a talk radio show host and two other executives at a Monterey, Calif.-based firm with misappropriating $2.5 million of approximately $7 million they raised through the fraudulent sale of interests in two real estate investment funds.
The SEC alleges that Barbra Alexander, the former president of APS Funding, used her status as host of an internationally-syndicated radio show for entrepreneurs called MoneyDots to lure investors who thought their money would be used to fund short-term loans secured by real estate. Alexander along with the firm’s secretary/chief financial officer Beth Piña of Fairfield, Idaho, and vice president Michael E. Swanson of Seaside, Calif., instead stole investor money to pay themselves $1.2 million and finance MoneyDots and other unrelated businesses unbeknownst to investors. Alexander even used $200,000 of investor funds to remodel her kitchen.
According to the SEC’s complaint filed in federal district court in San Jose, Alexander, Piña and Swanson raised nearly $7 million from 50 investors for two investment funds managed by APS Funding. They claimed that the funds would make short-term secured loans to homeowners and yield 12 percent annual returns to investors. Contrary to what investors were told, $1.2 million of their money instead went directly to Alexander, Piña, and Swanson for personal use, and $1.3 million in investor funds was used to finance other businesses owned by Alexander and APS Funding, including MoneyDots.
The SEC further alleges that Alexander, Piña, and Swanson furthered the scheme by sending monthly account statements to investors reflecting fictitious profits and, in classic Ponzi scheme fashion, paying out purported returns that actually came from new investors.
In its federal court action, the SEC charges Alexander, Piña, Swanson, and APS Funding with violating Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The SEC also charges Alexander, Swanson, and APS Funding with violating Sections 5(a) and 5(c) of the Securities Act. The SEC’s complaint seeks relief in the form of permanent injunctions against all defendants enjoining them from future violations of the provisions charged, an order requiring that they disgorge their ill-gotten gains, with prejudgment interest, and imposing civil penalties against Alexander, Piña, and Swanson.
See Also: SEC Complaint