SEC Charges State-Registered Investment Adviser, CEO, and Former COO with Offering Fraud
Litigation Release No. 24031 / January 22, 2018
Securities and Exchange Commission v. Hoplon Financial Group et al., No. 8:18-cv-00047 (C.D. Cal. filed Jan. 12, 2018)
The Securities and Exchange Commission announced fraud charges against a California-based entity, its CEO, and its former COO, for lying to investors in a real estate-related securities offering fraud.
According to the SEC's complaint, Hoplon Financial Group and its CEO, Daniel B. Vazquez, Sr., created the New Economic Opportunities Fund I, LLC vehicle for the ostensible purpose of pooling investor funds to purchase and flip residential real estate properties. The complaint alleges that between 2011 and 2014, Hoplon and Vazquez sold membership units in the fund, raising $2.18 million from 27 investors, primarily from investors' individual retirement account funds, based on misrepresentations about how much compensation they would take. The complaint further alleges that virtually from the outset of the offering, Hoplon and Vazquez, with the assistance of Hoplon's then-COO Gilbert Fluetsch, misused most of the funds to pay unrelated business or personal expenses, including approximately $780,000 that was misappropriated since January 2013. In addition, the complaint alleges that, by promoting and selling these securities, Hoplon and Vazquez-a state-registered investment adviser and registered representative of a broker-dealer, respectively, at the time of the alleged misconduct-violated federal broker-dealer registration provisions.
The SEC's complaint, filed on January 12, 2018 in the U.S. District Court for the Central District of California, charges Hoplon and Vazquez with violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further charges Fluetsch with violations of Section 17(a) of the Securities Act, and with aiding and abetting Hoplon and Vazquez's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
The SEC's investigation was conducted by Patricia Pei and Christopher Conte, and was supervised by Spencer E. Bendell. The SEC litigation will be handled by Lynn Dean. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.