U.S. Securities and Exchange Commission
Litigation Release No. 22058 / August 2, 2011
Securities and Exchange Commission v. Brian A. Bjork, et al., Case No. 4:11-cv-02830 (S.D. Tex.)
SEC CHARGES INVESTMENT ADVISER, ITS PRINCIPAL AND AFFILIATES IN TWO OFFERING FRAUDS
The Securities and Exchange Commission today announced that on August 1, 2011, it obtained a temporary restraining order, asset freeze, appointment of a receiver and other emergency relief against Houston investment adviser Select Asset Management LLC (“Select Asset”), its principal Brian A. Bjork, Select Asset Fund I, LLC, Select Asset Prime Index Fund, LLC, the estate of recently deceased J. David Salinas, and two Salinas business firms, with two frauds.
The complaint alleges that from 2004 through the present, Bjork offered securities in two fraudulent securities schemes, raising a total of $52 million. The complaint alleges that in the first scheme, Bjork, alongside business associate Salinas, offered investors corporate and other bonds through J. David Group of Companies, Inc., and J. David Financial Group, and raised approximately $39 million from more than 100 investors. According to the complaint, Bjork and Salinas promised investors safe, fixed income from highly-rated corporate and other bonds, but in reality they never acquired the bonds as promised. The complaint alleges that in the second scheme, Bjork—through Select Asset and its subsidiary defendant Select Capital Management LLC (“Select Capital”)—offered securities issued by two private funds and raised approximately $13 million from at least 52 investors since August 2007. According to the complaint, the two funds, which were controlled by Bjork, Select Asset and Select Capital, commingled investor money, failed to provide promised financial statements, and transferred money to fund-affiliated entities in related-party transactions undisclosed to investors. The complaint further alleges that in making the affiliated loans, the defendants failed to conduct required due diligence and loan-approval procedures that had been promised to investors in the private placement offering memoranda.
The Commission’s complaint alleges all of the defendants violated and/or aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. The Complaint also alleges that Bjork, Select Asset and Select Capital violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. In addition to emergency relief, the Complaint seeks disgorgement with prejudgment interest, penalties and imposition of permanent injunctions.
The Commission acknowledges the assistance of the U.S. Secret Service, Galveston County District Attorney Jack Roady, and the Texas State Securities Board in this matter.