Seller in Fraud Case to Pay Clients $480,000 : Settlement: To satisfy complaint by the SEC, Mission Viejo investment adviser will return about half of what he took in.
A Mission Viejo man has agreed to pay clients of his defunct investment counseling business nearly $480,000--about half of what he took in--to settle a civil fraud case filed in June by the Securities and Exchange Commission.
In a final judgment announced Monday, Randall C. Hutchens, who did business as Laguna Equities Inc. in Lake Forest, effectively pleaded no contest to the civil allegations, neither admitting nor denying the SEC’s charges but accepting a permanent injunction against performing similar acts in the future.
Hutchens, who could not be reached for comment Monday, was charged with selling investments in what he advertised as “secured collateralized notes” but which never existed. The ads said the notes were backed by major companies but SEC investigators found that the companies were not providing collateral for the notes and said Hutchens was diverting investment funds for his own and his company’s own uses.
Laguna Equities, which has since shut down, advertised the investment opportunity in a newsletter for two church-affiliated nursing homes in Riverside and San Bernardino counties.
The ads promised a 9.3% return in six months on a $10,000 investment and said 2% of the profit would be donated to the nursing home operation.
The SEC alleged that Hutchens collected more than $2 million from 60 investors and had paid some back before the charges were filed.
In the settlement and final judgment signed Dec. 3, Hutchens and his company were ordered to return $1,042,332, an amount representing the balance owing to 30 investors in the securities scheme.
But the agreement also noted that Hutchens and the company were unable to pay the full amount and ordered the SEC to collect approximately $480,000 that Hutchens and his company had placed in several investment and bank accounts. Those accounts were frozen by a federal judge in June.
Sandra J. Harris, enforcement branch chief in the SEC’s Los Angeles office, said Monday that the order means the remaining investors will get almost half of their money back. Hutchens will not be required to repay the remaining $562,000.
“That’s the important thing about this case,” Harris said. “All too often in this kind of case there is nothing left” by the time a case is resolved.
Agreements in which guilt is not admitted but court injunctions against repeat offenses are issued are referred to as “I-didn’t-do-it-and-I-won’t-do-it-again” settlements by law enforcement insiders.
