The SEC today charged 3 affiliated NY-based investment firms and 4 former senior officers with fraud, misuse of client assets, and other securities laws violations.  Adviser William Landberg and president Kevin Kramer - operating through West End Financial Advisors, West End Capital Mgmt, and Sentinel Investment Mgmt - misled investors into believing that their money was in stable, safe investments designed to provide steady streams of income. They had about $66 million under management.

In reality, West End faced deepening financial problems stemming from Landberg’s failed investment strategies.  This led Landberg to misuse over $8.5 million in investor assets - by fraudulently accessing from a bank, and used millions of dollars from an interest reserve account for unauthorized purposes. 

    CFO, Controller Also Charged.   West End CFO Steven Gould and Controller Janis Barsuk also were charged in the scheme.  They allegedly knew, or were reckless in not knowing, that Landberg was defrauding a bank that provided loans to a West End fund by misusing funds in a related interest reserve account.  Both officers nevertheless participated in the fraud by facilitating Landberg’s misappropriations from that account.

    Gould allegedly conceived and used improper accounting methods to conceal aspects of the fraud, and he issued account statements to investors showing false investment returns.  Barsuk facilitated Landberg’s uses of investor money to cover his personal obligations. Similarly, Kramer knew, or was reckless in not knowing, that West End faced severe financial problems and had difficulty obtaining sufficient financing to sustain its investment strategy. Nevertheless, Kramer failed to disclose those material facts to investors as he continued to market the funds to new and existing investors through April 2009.

    SEC Staffers in on the Case.    Ken Joseph, Matthew Watkins, and Cynthia Matthews of the NY  Regional Office, assisted by Alistaire Bambach.  Litigation will be led by Howard Fischer.   The investigation continues.   [SEC PR 11-17, 1/20]