Suspect in theft spent lavishly
Sherman Oaks money manager Bruce F. Friedman spent investor money on luxuries such as a $255,000 Bentley Continental, $110,000 in Dodgers tickets and a $79,000 hotel bill in the Bahamas, according to court documents made public Friday.
The Securities and Exchange Commission obtained an emergency order this week to temporarily freeze the assets of Friedman’s two companies, Diversified Lending Group Inc. and Applied Equities Inc., saying he had diverted at least $17 million of investors’ money for personal use.
In its lawsuit, the SEC said Friedman raised $216 million from about 300 investors across the United States, promising to invest in real estate and mortgage loans but instead spending millions on himself, family and friends.
Friedman has not commented. His lawyer, Richard Drooyan of Munger, Tolles & Olson, said late Friday that he had just accepted the case and was not yet familiar enough with the allegations to comment.
A note taped to the front door of Friedman’s offices on the 12th floor of a Ventura Boulevard office building said his companies were under federal receivership. The note provided an e-mail address for the receiver temporarily in charge of the companies’ assets.
SEC accountant Nina Y. Yamamoto filed a declaration along with the commission’s lawsuit, detailing how Friedman used $6.5 million of investor money to buy a Malibu home and $1.27 million for a home for an officer in his company.
Among the other purchases outlined in the SEC records, filed in U.S. District Court in Los Angeles and made public Friday, were:
* $650,000 in cash payments to Friedman’s family members
* $95,000 to jewelry designer Judith Ripka
* $65,000 to the Four Season Hotel in Westlake Village
* $51,000 to the downtown Millennium Biltmore Hotel
* $43,000 to designer Louis Vuitton
* $7,400 to a Barcelona, Spain, hotel
* $7,200 to a Nordstrom store in the San Fernando Valley
On top of that, the SEC has alleged, Friedman transferred at least $1.8 million of investor money to his charity, the Friedman Charitable Foundation. The foundation donated $10 million to help build the Children’s Museum of Los Angeles and pledged $5 million in partnership with the Dodgers Dream Foundation to help build youth ball fields throughout Southern California. Officials with the Dodgers and the museum said they were looking into the SEC’s allegations and have not yet decided how to respond.
In its lawsuit, the SEC filed declarations from investors and a money manager who detailed their investments with Friedman. One investor, Gerrit J. Bol, said he flew from Florida, where he lives part time, to Los Angeles in February to confront Friedman about a request he’d made five weeks earlier to withdraw part of his $100,000 investment. Friedman told him he had $50 million on deposit and would use that to repay him should the investment pool fail, Bol said.
Financial advisor H. Joseph Steck said he met with Friedman in 2007 to learn about his investment products. At the time, Friedman said his real estate investments had achieved returns of up to 30%, but he declined to disclose any specifics about properties in which he invested. Steck said he had invested about $500,000 of his clients’ money with Friedman.
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