U.S. Securities and Exchange Commission

Litigation Release No. 21829 / January 28, 2011

Securities and Exchange Commission v. William Landberg, Kevin Kramer, Steven Gould, Janis Barsuk, West End Financial Advisors LLC, West End Capital Management LLC, and Sentinel Investment Management Corporation, Defendants, and Louise Crandall and L/C Family Limited Partnership, Relief Defendants, Civ. No. 11-CV-0404 (S.D.N.Y.)

SEC CHARGES NEW YORK INVESTMENT FIRMS AND SENIOR OFFICERS WITH FRAUD

On January 20, 2011, the Securities and Exchange Commission charged three affiliated New York-based investment firms and four former senior officers with fraud, misuse of client assets, and other securities laws violations involving their $66 million advisory business.

The SEC alleges that the operation's investment adviser William Landberg and president Kevin Kramer - through the firms West End Financial Advisors LLC (WEFA), West End Capital Management LLC (WECM), and Sentinel Investment Management Corporation - misled investors into believing that their money was in stable, safe investments designed to provide steady streams of income. However, in reality West End faced deepening financial problems stemming from Landberg's failed investment strategies. When starved for cash to meet obligations of the West End funds or for his personal needs, Landberg misused investor assets, fraudulently obtained more than $8.5 million from a bank, and used millions of dollars from an interest reserve account for unauthorized purposes.

The SEC also charged West End's chief financial officer Steven Gould and controller Janis Barsuk for their roles in the scheme.

According to the SEC's complaint filed in U.S. District Court for the Southern District of New York, the misconduct occurred from at least January 2008 to May 2009. The SEC alleges that Landberg used substantial amounts of fraudulently-obtained bank loans to make distributions to certain West End fund investors, thereby sustaining the illusion that West End's investments were performing well. During the same period, Landberg also misappropriated at least $1.5 million for himself and his family. Landberg's wife Louise Crandall and their family partnership are named as relief defendants in the SEC's complaint.

The SEC further alleges that Gould and Barsuk knew, or were reckless in not knowing, that Landberg was defrauding a bank that provided loans to a West End fund by misusing funds in a related interest reserve account. Both officers nevertheless participated in the fraud by facilitating Landberg's misappropriations from that account. The SEC alleges that Gould conceived and used improper accounting methods to conceal aspects of the fraud, and he issued account statements to investors showing false investment returns. Barsuk facilitated Landberg's uses of investor money to cover his personal obligations. Similarly, Kramer knew, or was reckless in not knowing, that West End faced severe financial problems and had difficulty obtaining sufficient financing to sustain its investment strategy. Nevertheless, Kramer failed to disclose those material facts to investors as he continued to market the funds to new and existing investors through April 2009.

The Complaint alleges that Landberg, Kramer, Gould, WEFA, WECM, and Sentinel violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition, the complaint alleges that Landberg, WEFA, WECM, and Sentinel violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and that Landberg, WEFA, and WECM violated Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. Kramer, Gould, and Barsuk are charged with aiding and abetting violations of Sections 206(1) and 206(2) of the Advisers Act, and Sentinel is charged with aiding and abetting violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. Barsuk is also charged with aiding and abetting violations of the antifraud provisions of the Exchange Act. The Commission seeks permanent injunctive relief against each defendant and disgorgement of ill-gotten gains with prejudgment interest against defendants and relief defendants. The Commission also seeks civil penalties from Landberg, Kramer and Gould, the imposition of an independent monitor, and certain other sanctions.

The Commission acknowledges the assistance of the U.S. Attorney for the Southern District of New York, the Federal Bureau of Investigation, and the U.S. Commodity Futures Trading Commission.