U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22136 / October 20, 2011
Securities and Exchange Commission v. Charles P. Copeland, Copeland Wealth Management, A Financial Advisory Corporation, and Copeland Wealth Management, A Real Estate Corporation, Civil Action No. 11-08607 (RDTBx) (C.D. Cal.)
SEC CHARGES CALIFORNIA-BASED INVESTMENT ADVISER WITH FRAUD AND BREACH OF FIDUCIARY DUTY
On October 18, 2011, the Securities and Exchange Commission (“Commission”) filed a complaint in United States District Court in Riverside, California against Copeland Wealth Management, A Financial Advisory Corporation (“CWM”), Copeland Wealth Management, A Real Estate Corporation (“Copeland Realty”), and Charles P. Copeland (“Charles Copeland”) for fraud and breach of fiduciary duty. As an investment adviser registered with the Commission, CWM manages approximately $125 million in assets under management. The assets under management are primarily mutual funds and real estate funds. Copeland Realty, an unregistered investment adviser, is the general partner for 21 limited partnerships primarily invested in real estate. Charles Copeland, a certified public accountant, is the founder, co-owner and officer of both CWM and Copeland Realty.
The Commission alleges that from 2003 through May 31, 2011, Charles Copeland, CWM, and Copeland Realty raised over $62 million from over 100 investors, including many of Charles Copeland’s accounting clients, by selling interests in limited partnerships operated by CWM and Copeland Realty. According to the Commission’s complaint, throughout the offer and sale of the limited partnerships, Charles Copeland, CWM, and Copeland Realty made material misrepresentations and omissions regarding: (1) the use of investor funds, (2) conflicts of interest, (3) guaranteed returns, (4) the unauthorized trading of put options, and (5) the payment of undisclosed real estate commissions and other related compensation.
Without admitting or denying the Commission’s allegations, Charles Copeland, CWM, and Copeland Realty agreed to the entry of an order permanently enjoining them from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The defendants also agreed to an order appointing a receiver over CWM and Copeland Realty and prohibiting the destruction of documents. Disgorgement plus prejudgment interest and civil penalties are to be determined at a later date.