SEC Files Investment Fraud Case

The Securities and Exchange Commission filed a complaint in federal court Thursday alleging that a 29-year-old Manhattan Beach man defrauded investors of more than $22 million in retirement funds through a real estate scam.

Jon W. James sold stakes in a series of real estate companies he promised would generate returns as high as 24%, the SEC said. He held free dinners and retirement planning seminars to get more than 90 investors to transfer money to the companies from their IRAs.

“What we have seen not only in this case but in other cases is people targeting people’s IRA accounts because there is a large amount of money in those savings accounts,” said Briane Nelson Mitchell, an associate regional director in the SEC’s Los Angeles office. Mitchell said the commission filed suit in a similar fraud two years ago that had raised about $140 million.

In response to the complaint, a U.S. District Court judge appointed a temporary receiver to oversee the companies controlled by James and froze its assets.

An attorney for James could not be reached for comment.

The SEC alleged that James began soliciting investors in January 2004 with direct mail invitations to the free seminars. He didn’t purchase any real estate during 2004 and 2005 with the money raised from investors, using some of the funds instead to repay previous investors. James also diverted at least $1.4 million to his personal accounts, the SEC complaint said.