Washington, D.C., Oct. 7, 2010 – The Securities and Exchange Commission today charged a talk radio show host and two other executives at a Monterey, Calif.-based firm with misappropriating $2.5 million of approximately $7 million they raised through the fraudulent sale of interests in two real estate investment funds.
The SEC alleges that Barbra Alexander, the former president of APS Funding, used her status as host of an internationally-syndicated radio show for entrepreneurs called MoneyDots to lure investors who thought their money would be used to fund short-term loans secured by real estate. Alexander along with the firm’s secretary/chief financial officer Beth Piña of Fairfield, Idaho, and vice president Michael E. Swanson of Seaside, Calif., instead stole investor money to pay themselves $1.2 million and finance MoneyDots and other unrelated businesses unbeknownst to investors. Alexander even used $200,000 of investor funds to remodel her kitchen.
“Alexander led investors to believe she would invest their money in secured real estate financing, but she and her cohorts merely used the money for their own benefit,” said Marc J. Fagel, Director of the SEC’s San Francisco Regional Office.
According to the SEC’s complaint filed in federal district court in San Jose, Alexander, Piña and Swanson raised nearly $7 million from 50 investors for two investment funds managed by APS Funding. They claimed that the funds would make short-term secured loans to homeowners and yield 12 percent annual returns to investors. Contrary to what investors were told, $1.2 million of their money instead went directly to Alexander, Piña, and Swanson for personal use, and $1.3 million in investor funds was used to finance other businesses owned by Alexander and APS Funding, including MoneyDots.
The SEC further alleges that Alexander, Piña, and Swanson furthered the scheme by sending monthly account statements to investors reflecting fictitious profits and, in classic Ponzi scheme fashion, paying out purported returns that actually came from new investors.
The SEC’s complaint charges Alexander, Piña, Swanson, and APS Funding with violating the antifraud provisions of the federal securities laws, and also charges Alexander, Swanson, and APS Funding with the unregistered sale of securities. The action seeks injunctive relief, disgorgement of ill-gotten gains, and monetary penalties.
In a related criminal proceeding announced today, the U.S. Attorney’s Office for the Northern District of California filed criminal actions against Alexander, Piña, and Swanson based on the same alleged misconduct.
The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Northern District of California, the Federal Bureau of Investigation, and the Monterey County District Attorney’s Office. Eric Brooks, Sheila O’Callaghan, and Cary Robnett of the SEC’s San Francisco Regional Office conducted the SEC’s investigation.
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