SEC Suit Accuses Man of Ponzi Scam

The Securities and Exchange Commission said Friday that it filed a lawsuit against David R. Lund, a 32-year-old Huntington Beach resident, alleging that he ran a Ponzi scheme that targeted mostly elderly investors.

The SEC said a federal judge in Los Angeles issued a temporary restraining order against Lund and froze his assets.

Lund is the owner of Investors First Financial Services Inc. and Investors Guild Inc., based in Anaheim Hills. The SEC alleged that Lund had fraudulently raised $10.7 million from at least 233 investors since 2001.

According to the complaint, the investors, who were reached through telephone and mail solicitations, were promised a high rate of return and monthly income from investments in limited partnerships called the Credit First Funds.

The funds purportedly would buy distressed debts and either collect on them or resell them at a profit. Lund claimed that the funds would pay investors returns of 1% to 3% of their principal each month, the SEC said.

But the agency said that the funds consistently lost money and that early investors were paid from the money provided by new investors -- a classic Ponzi formula.

Lund profited by receiving fees from the funds totaling $1.5 million, the SEC said.

Lund could not be reached for comment. His attorney, Michael Oswald of Oswald & Yap, did not return a phone call.

U.S. District Judge Dale S. Fischer issued a temporary restraining order against Lund and his companies and issued orders to freeze his assets and prohibit the destruction of documents. The court also appointed Thomas F. Lennon Inc. as a temporary receiver of the various company and partnership assets.

The asset freeze will remain in effect until Dec. 23, when the court will hold another hearing in the case. The SEC said it was seeking a permanent injunction, repayment of ill-gotten gains and civil penalties.

Also on Friday, a federal judge in Los Angeles sentenced 57-year-old Larry Toshio Osaki of Upland to 20 years in prison, the U.S. attorney’s office said. Osaki pleaded guilty in March to charges related to a Ponzi scheme he ran from 1997 to October 2003. Authorities said the scheme caused investor losses of $145 million.