The SEC contends that Barbra Alexander, the former president of APS Funding, used her status as host of an internationally-syndicated radio show for entrepreneurs called MoneyDots to lure investors who thought their money would be used to fund short-term loans secured by real estate.
Misdirected funds
Alexander along with the Monterey, Calif.-based firm's secretary/chief financial officer Beth Pina and vice president Michael E. Swanson instead stole investor money to pay themselves $1.2 million and finance MoneyDots and other unrelated businesses unbeknownst to investors, the SEC alleges. Alexander is accused of using $200,000 of investor funds to remodel her kitchen.
"Alexander led investors to believe she would invest their money in secured real estate financing, but she and her cohorts merely used the money for their own benefit," said Marc J. Fagel, director of the SEC's San Francisco regional office.
No investments
According to the SEC's complaint, Alexander, Pina and Swanson raised nearly $7 million from 50 investors for two investment funds managed by APS Funding. They claimed the funds would make short-term secured loans to homeowners and yield 12 percent annual returns to investors.
Contrary to what investors were told, $1.2 million of their money instead went directly to Alexander, Pina, and Swanson for personal use, and $1.3 million in investor funds was used to finance other businesses owned by Alexander and APS Funding, including MoneyDots.
The SEC further maintains that the trio advanced the scheme by sending monthly account statements to investors reflecting fictitious profits and -- in classic Ponzi scheme fashion -- paying out purported returns that actually came from new investors.
The SEC's complaint charges Alexander, Pina, Swanson, and APS Funding with violating the antifraud provisions of the federal securities laws, and also charges Alexander, Swanson, and APS Funding with the unregistered sale of securities. The action seeks injunctive relief, disgorgement of ill-gotten gains, and monetary penalties.
In a related criminal proceeding, the U.S. Attorney's Office for the Northern District of California filed criminal actions against Alexander, Pina, and Swanson based on the same alleged misconduct.
