SEC, Tessa Settle Fraud Case; Investors Are Out of Luck

An Anaheim man and his company settled a securities fraud case by agreeing to refund nearly $1 million to investors and refrain from future securities violations, the Securities and Exchange Commission said Friday.

But Tessa Financial Group Inc. in Harbor City and Richard Hamilton, its chief operating officer, won’t have to pay any money. The SEC said the refund is being waived because the defendants have no means to pay it.

The SEC had charged Tessa and Hamilton in late September of bilking 56 investors out of $1.9 million in a fraudulent investment program called Capital Management Agreement. The SEC contends Hamilton solicited money from about 200 people.

Hamilton could not be reached for comment Friday.

The lawsuit asserts that Hamilton and Tessa told investors their money would be pooled and invested in low-risk securities at the going prime rate, which ranged from 7.75% to 9.5%.

But, the suit alleges, Hamilton and the company put only 5% of the money in a brokerage account and invested only 2% of it in stocks. More than 90% of the funds were diverted to more than 10 start-ups Hamilton was trying to get off the ground, the SEC contends, and some money went to Tessa Financial’s operating expenses.

Investors also were told they could get their money back, plus interest, within seven days after sending a written request, which the SEC alleged was untrue.