SEC Charges Arizona Man with Making False and Misleading Statements and Misappropriating Investor Funds

Litigation Release No. 24220 / July 31, 2018

Securities and Exchange Commission v. David A. Harbour, No. CV-18-2401-PHX-DGC (D. Ariz. filed July 31, 2018)

On July 31, 2018, the Securities and Exchange Commission charged David A. Harbour of Scottsdale, Arizona with making misrepresentations to investors and misappropriating over $1.5 million in investor funds to finance his personal lifestyle and pay off his debts.

According to the SEC's complaint, between July 2014 and August 2016, Harbour raised money from four friends and business acquaintances by representing to them that their funds would be used to finance various businesses, including an American Indian business entity engaged in high-interest installment lending to consumers. The SEC alleges that Harbour told the investors he would use their money exclusively for revenue-generating businesses, and promised them high annual returns, ranging from 12% to 20%. Instead, the SEC alleges, Harbour diverted substantial portions of the invested funds for personal purposes that included paying off hundreds of thousands of dollars in personal credit card expenses, such as expenses for private jets, cruises, stays at resorts, and a payment to a Beverly Hills plastic surgeon. Harbour also allegedly used the investor money to make payments on personal loans and debts he owed to investors in prior business ventures. Harbour ultimately misappropriated $1,535,000 of the money raised from the four investors.

The SEC's complaint, which was filed in the District of Arizona, charges Harbour with violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5(b) thereunder, as well as Section 17(a)(2) of the Securities Act of 1933. Harbour has agreed to a settlement that is subject to court approval. Without admitting or denying the allegations, Harbour has agreed to pay a total of $3,167,072, consisting of disgorgement of $1,535,000 plus prejudgment interest of $97,072, and a penalty of $1,535,000. Harbour also agreed to be enjoined from future securities law violations.

The SEC's investigation was conducted by Christopher A. Nowlin and Christopher M. Conte, and supervised by Spencer E. Bendell.