Three affiliated New York investment firms and four senior officers were charged with fraud, misuse of client assets and other violations involving their advisory business, according to the Securities and Exchange Commission.
The SEC alleged that investment adviser William Landberg and President Kevin Kramer, through firms West End Financial Advisors LLC, West End Capital Management LLC and Sentinel Investment Management Corp., misused investor assets, fraudulently obtained more than $8.5 million from a bank and used a reserve account for unauthorized purposes.
"West End raised millions from investors by touting false positive returns while concealing fraudulent bank loans, cash flow problems and the misappropriation of investor assets," said David Rosenfeld, associate director of the SEC's New York regional office.
Mr. Landberg allegedly used substantial amounts of fraudulently obtained bank loans to make distributions to certain West End investors, sustaining the illusion their investments were performing well.
The SEC accused Mr. Kramer of knowing, or being reckless in not knowing that West End faced severe financial problems and had difficulty obtaining funding its investment strategy, though he continued to market the funds to investors through April 2009.
West End Financial Officer Steven Gould and Controller Janis Barsuk also face charges related to the alleged misconduct, which the SEC said occurred from January 2008 to May 2009. The SEC accused the two of knowing, or being reckless for not knowing, about Mr. Landberg's alleged fraud. Mr. Gould allegedly used improper accounting methods and issued account statement with false investment returns.
Mr. Landberg also is accused officials of misappropriating at least $1.5 million for himself and his family.
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