Washington, D.C., Feb. 23, 2010 — The Securities and Exchange Commission today charged two Sacramento-area men with misappropriating approximately $10 million from more than 100 investors who were falsely promised that their money would be loaned to homebuyers and secured by real estate deeds of trust.
The SEC alleges that Lawrence “Lee” Loomis solicited investments in investment funds managed by his father-in-law John Hagener. Loomis told investors they were investing in safe “liquid high-yield accounts” that would earn 12 percent returns guaranteed by a third party. The SEC’s complaint alleges that Loomis and Hagener instead used the money primarily to prop up Loomis’ other failing businesses. The SEC further alleges that Loomis paid himself hundreds of thousands of dollars from companies that received investor money and Hagener received more than $190,000 for managing the funds even though he was misappropriating investors’ money to fund other businesses.
“Loomis led investors to believe he would invest their money in secure home loan financing when, in reality, he and Hagener squandered the money to keep his other failing businesses afloat,” said Marc Fagel, Director of the SEC’s San Francisco Regional Office.
According to the SEC’s complaint, filed in federal court in Sacramento, Loomis attracted investors to “Loomis Wealth Solutions” seminars held in 2007 and 2008 through newspaper advertisements and direct mailings. Loomis solicited seminar attendees to invest in two investment funds called the “Naras Secured Funds,” claiming the funds would make short-term secured loans to homebuyers, yielding 12 percent returns to investors. The SEC alleges that, contrary to Loomis’ promises, the loans were primarily used to pay such operating expenses as payroll, utilities, and travel expenses for several other businesses owned by Loomis, and to prop up a related real estate scheme. The SEC also alleges that the loans were not secured by real estate deeds of trust as Loomis had claimed. Hagener allegedly facilitated the scheme by transferring investors’ money to accounts that he knew were being used to fund the other businesses. Hagener also allegedly sent investors fake account statements falsely stating that their investments had earned 12 percent returns.
The SEC’s complaint charges Loomis, Hagener, Loomis Wealth Solutions, LLC, and Lismar Financial Services, LLC with violating the antifraud and registration provisions of the federal securities laws, and also charges Hagener and his company, Lismar Financial Services, LLC, with violating investment advisory provisions of the federal securities laws. The action seeks injunctive relief, disgorgement of ill-gotten gains, and monetary penalties.
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For more information about this enforcement action, contact:
Michael S. Dicke
Associate Regional Director — Enforcement
SEC’s San Francisco Regional Office