SEC Charges Former Adviser Over $2 Million Fraud Scheme
The Securities and Exchange Commission announced that it has filed charges and obtained a consented-to asset freeze against a Santa Maria, California-based investment adviser who allegedly defrauded at least nine elderly female advisory clients of more than $2 million.
According to the SEC’s complaint, Julie Anne Darrah and her firm, Vivid Financial Management Inc., misappropriated approximately $2.25 million from clients who had hired Darrah and her firm to be their investment adviser. The complaint alleges that Darrah primarily targeted elderly female advisory clients, many of whom had come to rely on Darrah for their financial well-being, including one client who lives in a memory care facility. The complaint states that Darrah gained control of her victim’s assets by becoming the trustee of their trusts, using standing letters of authorization to transfer funds from their brokerage accounts to their bank accounts, becoming the signatory on their bank accounts, and/or obtaining power of attorney over their property and accounts.
The SEC says Darrah transferred her victims’ money to her personal bank accounts, where she commingled the funds with her own money that she used to buy and improve real properties, pay her personal expenses, buy luxury vehicles, and buy and operate restaurant businesses at a loss.
The complaint says one of the victims was a 75-year-old widow from whom Darrah misappropriated more than $1 million and her sister, a 78-year-old widow, who lost about $578,000 via the alleged fraud.
According to the SEC, Darrah tried to conceal the fraud by changing client account mailing addresses to her own address, falsely disclosing that she was not acting as the trustee for any clients and having a client initial two backdated promissory notes that Darrah provided to the SEC in response to its subpoenas.
The SEC’s complaint was filed in the U.S. District Court for the Central District of California on Oct. 20, 2023. The complaint seeks disgorgement of allegedly ill-gotten gains, prejudgment interest, monetary penalties, and permanent and conduct-based injunctions. Darrah agreed to the entry of a preliminary injunction against her as well as an order freezing assets, requiring an accounting, prohibiting the destruction of documents, and granting expedited discovery, which the district court entered on Oct. 20, 2023.
Darrah was also previously sued by advisor aggregator Wealth Enhancement Group, which acquired Vivid Financial Management in 2021. WEG says she used her highly regarded community roles to win over the trust of her victims.
Darrah was previously registered with National Planning Corporation for 12 years before joining Mutual Securities Inc. for eight years, according to BrokerCheck.
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