O.C. Man Accused of Fraud
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The Securities and Exchange Commission on Thursday charged a Harbor City company and an Orange County man with running a fraudulent investment operation that bilked $1.9 million from 56 investors.
Tessa Financial Group Inc. and its chief operating officer, Richard Hamilton of Anaheim, ran an investment program called Capital Management Agreement. According to the complaint, investors were told that their money would be pooled into a brokerage account, invested in low-risk public and private securities, provide a return equal to the prime lending rate, and that the money was guaranteed by Tessa.
The prime rate ranged from 7.75% to 9.5% over the four years that Tessa raised the money, according to the SEC.
In fact, the Capital Management Agreement put only 5% of the money it raised in a brokerage account and invested only 2% of it in stocks, the SEC charged. More than 90% of the funds were diverted to more than 10 start-ups Hamilton was trying to get off the ground, said Aimee Dominguez Silvers, an SEC lawyer. Money also went toward Tessa Financial’s operating expenses.
The majority of the money was uninsured.
Hamilton, who is believed to have solicited money from 200 people, could not be reached for comment Thursday.
The SEC wants the defendants to repay investors their principal, plus interest, and pay an undetermined fine.
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