The SEC charged three affiliated New York investment firms and four of its senior officers with fraudulent activity and a series of violations relating to their advisory business, according to the regulator.
The SEC alleged that Steven Gould, CFO; Janis Barsuk, Controller; William Landberg, investment advisor and Kevin Kramer, president, all operated via West End Financial Advisors (WEFA), West End Capital Management (WECM), and Sentinel Investment Management Corporation (where Landberg also served as CCO), misused investor assets while fraudulently funelling out more than $8.5 million from a bank and used a reserve account for unauthorised 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,’ says David Rosenfeld, associate director of the SEC’s in New York.
The federal watchdog further accused these executives and companies for unethical behaviour where they intentionally concealed West End group’s financial problems that were triggered by wrong investment strategies, thus forcing investors to believe that they were making investments in lucrative and stable companies.
The agency further charged Kramer of knowing or being reckless in not knowing that West End encountered financial problems and had complications in obtaining funding for its investment strategy. Despite this, Kramer continued to sell the funds to investors through April 2009.
Moreover, Gould allegedly used creative yet improper accounting methods to cover their wrongdoings while issuing financials with false investment returns.
According to the complaint, the misrepresentations occurred from January 2008 till May 2009 and raised $4.7 million from investors.
Attorneys representing the accused officials and companies couldn’t immediately be reached as of press time.