SEC Charges 2 Firms With Fraud

The Securities and Exchange Commission’s Los Angeles office filed fraud charges Thursday against two separate investment entities, alleging misappropriation of at least $1.6 million in investors’ funds.

In one complaint, the SEC alleged that Pacific Palisades-based investment advisor Benjamin Franklin Bush III and his firm Ben Bush Investment Management have defrauded clients by misappropriating at least $450,000 in client funds since January 1995.

The SEC alleges that Bush has used clients’ funds to pay his own expenses and to purchase “such personal items as hockey tickets and jewelry,” while sending clients false statements showing that he had bought investments for them.

In addition, the SEC alleges, Bush “induced several of his clients to purchase Brazilian bonds of uncertain value issued in 1902 and 1915, which Bush keeps in his safety deposit box” at his bank.

The SEC said the U.S. District Court has frozen Bush’s assets for 10 days pending a hearing. The SEC said he manages at least $10 million for wealthy clients.

Bush said he had no comment.

In a separate complaint, the SEC accused Empower Telecommunications Corp. of Los Angeles and three of its former and current officers and directors of “a nationwide fraudulent offer and sale of unregistered Empower securities allegedly to build two telephone exchanges in Indonesia.”

The sales, which raised $6.56 million from what the SEC described as 350 mostly unsophisticated investors, took place between January 1993 and October 1994, the agency said.

It alleges that Empower Chairman William H.B. Chan “misappropriated approximately $1.2 million” of the proceeds, spending the money on “a wide variety of business ventures, including Vietnamese art research.”

Also charged were Osvaldo N. Lorenzetti and Donald E. Whorl. The SEC said Lorenzetti agreed to an injunction barring him from committing securities fraud, but civil penalties were not assessed because of “his demonstrated inability to pay.” Charges remain against Chan and Whorl. Neither could be reached for comment.