SEC Probe Accuses Financial Advisor

The Securities and Exchange Commission has charged a Camarillo investment advisor with cheating more than 100 investors, including senior citizens and professional athletes, out of $12.5 million to $18 million during the 1990s.

In a federal civil complaint filed Thursday in Los Angeles, the SEC accused Donald D. Lukens, 50, of engaging in a series of fraudulent schemes that drew investments from dozens of athletes such as NBA veterans Byron Russell and Keith Van Horn, NFL stars Simeon Rice and Shannon Sharpe, Hall of Fame running back Eric Dickerson and former boxing champion Terry Norris.

Investors included schoolteachers, doctors, small-business owners, disabled people and retirees on fixed incomes who say they lost their life savings and are now struggling to get by.

The complaint alleges the number of victims may exceed 200 and losses surpass $25 million. Lukens’ onetime employee, James C. Allison, 50, of Roscoe, Texas, was also accused of fraud.

Among Lukens’ victims, the complaint charges, were investors who knew and trusted him--his Camarillo neighbors, his pastor and Ventura Missionary Church members, his former high school classmates and teachers, and his children’s former teacher.

“These victims placed complete reliance on Lukens and entrusted him with funds they needed for retirement or for daily necessities, funds they could not afford to lose,” according to an SEC statement released Friday.

Lukens also “stole or diverted millions of dollars that clients and customers entrusted to him,” said Cheryl J. Scarboro, assistant director of the commission’s enforcement division in Washington.

The regulators are seeking a federal court judgment that Lukens violated the law, an injunction prohibiting further violations, and an order requiring him to repay investors with interest and a fine.

Lukens is also under criminal investigation by the Ventura office of the FBI. He could not be reached for comment.

In a second action Thursday, the SEC asked a federal bankruptcy judge in Santa Barbara to deny Lukens’ request to escape millions of dollars in debts he incurred through alleged theft or fraud. In all, about 500 creditors claim Lukens owes them nearly $47 million. Lukens lists assets of less than $1 million.

The SEC maintains that Lukens, an unregistered investment advisor and broker-dealer, induced investors to buy into a host of “unsuitable investments laden with significant undisclosed risks.”

“In soliciting these funds,” the SEC statement said, “Lukens routinely and falsely described the investments as ‘safe’ and ‘secure,’ promised high returns, provided baseless personal guarantees, made other materially false or misleading statements--including overstating the value of collateral underlying the mortgage-backed securities.”

Operating out of an Oxnard office, Lukens’ Community Group Funding borrowed from friends and neighbors to provide money for developers who were unable to secure loans through mainstream lenders, the complaint charges. In 1995, he created Global Sports & Entertainment, which represented at least 40 current or former pro athletes in securities investments.

The complaint said a Global promotional brochure described Global’s mission this way: “To provide you with an investment strategy that gives you a lifetime of financial security.”

Lukens allegedly defrauded investors in a proposed hotel and condominium project in Monterey, a proposed residential time-share property at Lake Tahoe, the Palm Colony Villas condominium project in Camarillo and several condo projects in Murietta, Calif.

Securities Lukens peddled shared a common characteristic, the commission statement said. “They secretly enriched Lukens through his receipt of undisclosed commissions and fees.”

Also, the SEC charged Lukens with misappropriating or diverting millions of dollars in investments.

And in other transactions, Lukens is charged with gaining millions of dollars from clients to invest in stock, venture capital and real estate projects. Instead, he settled personal debts, including payments on his hillside mansion in Camarillo, and repaid earlier investors in previous “Ponzi-like” schemes, the commission charged.

“Lukens often exploited individuals, young and old, who lacked sophistication or experience with financial or investment-related matters,” the SEC complaint said.

As his debts climbed and his deals fell apart, Lukens filed for bankruptcy this year. His attorney, Jay Michaelson, has said creditors’ claims against Lukens are overblown. Michaelson could not be reached for comment Friday.