The SEC charged an investment adviser, fund manager and 2 individuals with securities fraud involving client funds.  Civil injunctive action was filed in Los Angeles against MAM Wealth Management, LLC, MAMW Real Estate General Partner, LLC, and individuals, Alex Martinez and Ralph Sanchez.  The alleged fraud involved client investments in a $10.3 million risky real estate venture.

        Allegations in the SEC Complaint.   From July 2007 through March 2009, Martinez, a MAM and MAMW principal, and Ralph Sanchez, a MAM registered rep and MAMW principal, had 50 of their advisory clients invest in MAM Wealth Management Real Estate Fund, LLC (Fund).  They had misrepresented to some clients that the Fund was a safe, relatively liquid investment, was earning 9% per year, and would show profits in 3 years. 

The pair allegedly used their discretionary authority over other clients’ funds - many of which were retirement accounts - to invest them in the Fund, even though it was unsuitable for their clients' conservative investment goals.  The Fund also was unsuitable for clients who didn't have the ability and willingness to accept the risks of losing their entire investment.  The SEC alleges that the defendants caused the Fund to use client funds to make risky mortgage loans.

The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.   This is  [SEC Litigation Release 21921, 4/7]