Heath Biddlecome, founder and president of registered adviser California Wealth Management (dba IFC Advisory), was charged by the SEC for misleading investors in an investment fund he managed.

From 2007 to 2009, Biddlecome managed the of Homestead Properties, an investment fund that raised nearly $10mn from 36 investors.  Homestead's offering materials stated that investor funds would be used for real property investments - specifically mobile home park communities.  In 2008, Biddlecome transferred $4.5mn of these funds into a brokerage account held in Homestead's name for the purpose of engaging in speculative short-term trading.  Investors were never informed of the change in investment strategy.  

Biddlecome had made these other representations:  (i) that Homestead would be audited annually by an outside accounting firm;  (ii) that a registered broker-dealer would be used to sell interests in the Homestead fund to other investors;  and, (iii) that investor distributions would come from accrued net profits.  Instead, no audit was ever completed, no Homestead interests were ever sold through a broker-dealer, and Homestead had no accrued net profits and, thus, any distributions to investors came from other investors' capital contributions - i.e., a Ponzi scheme.

Finally, Bddlecome sold unregistered securities (Homestead offering), even though he was not associated with a registered broker-dealer, and failed to produce certain records to SEC staffers examining his fund. 

SEC Sanctions.   Biddlecome was barred from the industry and may be brought to arbitration by fund investors.   [SEC Administrative Proceeding 3-14387, 5/16/11]