Investment Operation Is Frozen

A Los Angeles federal judge has frozen the operations of an Anaheim Hills investment manager at the request of the Securities and Exchange Commission, which accused him of operating a $10-million securities fraud.

U.S. District Judge Dale S. Fischer issued an order Monday freezing the assets of David R. Lund; Lund’s companies, Investors First Financial Services Inc. and Investors Guild Inc.; and three funds he managed, Credit First Fund, Credit First and Credit First Income Plus.

Fischer also appointed Thomas F. Lennon Inc. as a permanent receiver over Investors First, Investors Guild and Credit First, said Kelly C. Bowers, assistant regional director for the SEC in Los Angeles.

According to an SEC civil complaint, from 2001 through 2005 Lund’s operations raised $10.7 million through sales of ownership interests in the Credit First funds, which bought up $600 million in debts that had gone into default. Credit First’s aim was to collect them or resell them at a profit, with a projected return of 1% to 3% a month, the SEC said.

Citing sworn statements from several investors, the SEC accused Credit First of breaking its promise to pay back the investors with profits from the ventures. In fact, monthly payments were made with the investors’ own capital, the SEC said. It also accused Lund of failing to register his investment as securities.

Lund’s attorney, Nathan J. Hochman of Beverly Hills, said his client never promised to pay profits to investors during the early years of the venture. Instead, Hochman said, Lund had let the investors know that they would first get back their own capital -- a benefit because those initial returns would be tax-free. He contended that the investments were private and exempt from registration.