SEC Accuses San Diego Couple of Securities Scam

The Securities and Exchange Commission on Thursday accused a San Diego couple and four associates of duping investors into putting $9 million into bogus securities that were supposed to finance the purchase of medical claims.

In a suit filed in U.S. District Court in San Diego, the SEC named Donald and Minnie Bader of San Diego, who also face criminal charges in the same court over their alleged involvement in a health insurance fraud scheme; three relatives of the Baders, and Harry C. Shank, a San Diego resident said to be the nominal head of a San Diego financial company controlled by the Baders.

The civil suit is the latest fallout from what some insurance company investigators say began as a massive health insurance and medical billing fraud in Southern California. Recently, investigators say, it has grown into a securities fraud as well.

The new SEC complaint alleges that the defendants sold unregistered securities issued by Centre City Funding of San Diego and that they misrepresented and omitted material facts in selling the securities--which investors were told would be used solely to finance the purchase of medical claims and other accounts receivable. The complaint also accused the defendants of fraud and said that they “misappropriated” investor funds in a “Ponzi-like” scheme.

The Baders could not be reached for comment.