SEC Files Securities Fraud Lawsuit Against Southern California Wealth Manager

Thumbnail image for Thumbnail image for sec crest.bin.jpgToday, the Securities and Exchange Commission (SEC) announced the filing of a civil securities fraud lawsuit against Southern California wealth advisory firm MAM Wealth Management, LLC (MAM), MAMW Real Estate General Partner, LLC (MAMW), Alex Martinez and Ralph Sanchez. The action alleges securities fraud in connection with client investments of $10.3 million in a risky real estate investment. According to the complaint, from 2007 through 2009, Martinez and Sanchez advised 50 of their clients to invest in MAM Wealth Management Real Estate Fund, LLC (MAM Fund) and misrepresented that the MAM Fund was a safe and liquid investment with 9% annual earnings. Martinez and Sanchez are alleged to have used their discretionary authority over their clients’ accounts to invest in the MAM Fund despite its unsuitability for their conservative investment goals. Many of these client accounts were retirement accounts and the MAM fund was unsuitable for clients who were unable to accept the risk of losing their entire investment. According to the SEC, the defendants caused the MAM Fund to use client funds to make risky mortgage loans. In its action, the SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.