Repeat RIA offender charged with fraud

The SEC says Dean Tellone and his California firm hid information from mortgage investors.

The Securities and Exchange Commission has charged Tellone Management Group, an Anaheim Hills, California-based registered investment adviser, and its president Dean Tellone with fraud and breach of fiduciary duty in connection with a scheme to hide information from investors in a mortgage fund that the firm managed.

The SEC also charged Steven Wolfe, the firm’s vice president for investments, and Tellone’s friend Robert Gumerman for their roles in the fraudulent scheme.

In 2017, the SEC issued a cease-and-desist order against Tellone and his firm in connection with its procedures for allocating the trades it conducted for clients.

According to the SEC’s current complaint, from 2015 through the present, Tellone and his firm concealed material information from TMG’s mortgage fund investors, many of whom were advisory clients, and from two successive audit firms in order to hide a significant loss in the fund. The complaint alleges that Tellone instructed Gumerman to mislead the auditors about the status of a $1 million loan the fund made to Gumerman and his wife that had been discharged in bankruptcy proceedings.

Without admitting or denying the allegations in the complaint, Gumerman consented to the entry of a final judgment, subject to court approval, permanently enjoining him from violating the antifraud provisions of the federal securities laws.

The SEC is seeking disgorgement of ill-gotten gains with prejudgment interest, civil penalties and permanent injunctive relief from the other defendants.

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