SEC Inquiry Targets Investment Company

The Securities and Exchange Commission said a California court has frozen the assets of an investment advisor the agency is suing for allegedly defrauding investors of $4.4 million.

The SEC alleged in the lawsuit filed Friday in U.S. District Court that Emmanuel Lagpacan of Lafayette, Calif., fraudulently sold $4.4 million in phony securities to 73 of his clients from January 1990 to at least February of this year.

The victims, the SEC said, included clients of Lagpacan’s advisory business, Money Matters, Financial Consultants & Accountants of Walnut Creek, as well as clients from his previous job as a stockbroker at Waddell & Reed Inc.

The suit also names Kubasaki Associates Inc., a real estate company run by Lagpacan; Lagpacan’s assistant, John Moreno of Walnut Creek; and Diablo Asset Development LP, a real estate partnership run by Moreno.

“The defendants deny all the material allegations and that they engaged in any wrongdoing whatsoever,” said Robert Verber, an attorney with the San Francisco firm of Freeland, Cooper, Lehocky & Hamburg who represents defendants in the case.

The SEC alleges that Lagpacan convinced clients to sell their investments in mutual funds, annuities and other securities and invest in what he described as low-risk, government-insured investments supposedly issued by Diablo Advisory Services.

Diablo, the SEC alleges, was a front for Kubasaki. Lagpacan allegedly deposited the money in Kubasaki’s checking accounts and used it to buy property under Kubasaki’s name.

While at Waddell, Lagpacan allegedly defrauded clients by falsifying brokerage account documents to transfer clients’ money, without their knowledge, from mutual funds to his own real estate company bank accounts.

The SEC alleges that Lagpacan and Kubasaki were aided by Moreno.

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Lagpacan still owes at least $3.2 million to about 50 investors in California, Hawaii and four other states, the SEC alleges.

The SEC said Lagpacan recently sold the properties and distributed the proceeds unfairly to a small number of favored clients.

More than 40 clients haven’t received any money from the property sales, the SEC alleged in its complaint.

The court froze Lagpacan’s business assets and Kubasaki’s assets and appointed a temporary receiver to oversee Kubasaki.

Verber said the defendants agreed, in the interest of their clients, to the asset freeze and the appointment of a receiver.