SEC v. Bradley A. Holcom, Case No. 3:12-cv-01623 (S.D. Cal.); SEC v. Jose L. Pinedo, Case No. 3:12-cv-01620 (S.D. Cal.).  On September 27, 2012, the SEC announced fraud charges against Bradley Holcom and Jose Pinedo.  Holcom was behind an unregistered offering that sold $42 million worth of promissory notes to investors, many of whom were senior citizens.  He offered investors guaranteed monthly interest payments on safe deals.  He also told investors that their funds would be used to finance the development of specific pieces of real estate, and that each investment would be secured by a first-position trust deed on the underlying property.  In reality, however, the investments were unsecured, and the same piece of underlying property was often pledged as collateral on several promissory notes.  Holcom was also running a Ponzi scheme.  Although he used some of the funds to develop real estate, he also relied on those funds to make interest and principal payments on promissory notes coming due.  He also took investor funds to pay himself salary and commissions of more than $2 million. 

In a separate complaint, the SEC charged Jose Pinedo, who was Holcom’s bookkeeper and an officer or manager of Holcom’s corporate entities.  Pinedo often signed promissory notes and other false and misleading documents that were sent to investors.

Holcom is charged with violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, and Rule 10b-5 thereunder.  The SEC is seeking a permanent injunction, disgorgement plus pre- and post-judgment interest, and civil penalties against Holcom.

Pinedo has settled with the SEC.  Without admitting or denying the allegations, he consented to an injunction against violations of Sections 5(a), 5(c), 17(a)(2) and 17(a)(3) of the Securities Act.