SEC files suit against California hybrid adviser for fraud

The Securities and Exchange Commission has filed a suit charging that a hybrid advisory firm in California and its senior managers engaged in fraud and lied to investors in a real estate-related, securities offering fraud.

According to the SEC’s complaint, Hoplon Financial Group and its CEO, Daniel B. Vazquez, Sr., sold membership units in the New Economic Opportunities Fund I they created to purchase and flip residential real estate properties. The complaint alleges that between 2011 and 2014, Hoplon and Mr. Vazquez raised $2.18 million from 27 investors, primarily from those investors’ individual retirement accounts, based on misrepresentations about how much compensation they would take.

The complaint also alleges that virtually from the time of the offering, Hoplon and Mr. Vazquez, with the assistance of Hoplon’s then-COO Gilbert Fluetsch, misused most of the funds to pay unrelated business or personal expenses, including approximately $780,000 that was misappropriated since January 2013.

Hoplon Financial Group is a California corporation organized on April 29, 2010, with a last-known business address in Irvine, Calif. It was a California state-registered investment adviser firm through early 2015, when its registration was revoked for failure to pay its annual registration renewal fee. Hoplon’s corporate status is currently suspended by the California Franchise Tax Board for failure to meet tax requirements. Hoplon has no current officers or employees other than Mr. Vazquez, no known ongoing business operations, and no known assets in its name.

Mr. Vazquez was a registered representative until he was barred by the Financial Industry Regulatory Authority in June 2016 for failing to respond to requests for information.

The SEC asked the court to order the defendants to disgorge all ill-gotten gains, plus interest; and also asked to order them to pay civil penalties.

Related Topics: Securities and Exchange Commission