SEC Charges Investment Adviser with Misappropriating $2.8 Million From her Clients

On August 23, 2017, the Securities and Exchange Commission (“SEC”) filed a complaint in the United States District Court for the District of Colorado against Sonya D. Camarco (“Camarco”), an investment adviser.  The complaint alleges that Camarco “misappropriated over $2.8 million in investor funds from her clients and customers.”  The complaint also alleges that Camarco used these funds to pay a variety of personal expenses, including credit card bills and mortgages.

As stated in the SEC’s complaint, Camarco was a registered representative and investment adviser representative of LPL Financial LLC (“LPL”) from February 2004 through August 2017.  Under LPL’s policies, Camarco was not allowed to take money from client accounts unless the clients given her “specific and express” authority to do so.  However, the SEC’s complaint alleges that in July 2017, LPL realized that Camarco had been part of numerous suspicious transactions involving her clients’ accounts from 2004 through 2017.

For example, evidence showed that numerous checks had been made payable to an entity named “C Investments.”  Frequently, the checks were mailed to a private post office box that Camarco rented.  The checks were deposited into the account of an entity for which Camarco was the sole registered agent.  The SEC alleges that Camarco fabricated client signatures on check requests dictating that checks made to C Investments “be drawn on client accounts.”

The SEC also alleges that when investors inquired about payments from their accounts to C Investments, Camarco made false statements claiming that C Investments was an outside investment she made for them.  She also allegedly did not inform investors that she was affiliated with C Investments.  Camarco also allegedly told LPL that C Investments was an outside investment that she made for her clients and that she was not connected to C Investments.  According to the SEC, however Camarco used the funds she allegedly misappropriated from client accounts to pay about $462,740 in credit card bills.  She also allegedly used these funds to pay the mortgages on five properties owned by her family’s trust.

The SEC asserted that, through her various misrepresentations to clients and to LPL, Camarco committed fraud, in violation of the Investment Advisers Act of 1940 (“Advisers Act”).  The complaint requests that the court issue an injunction against Camarco prohibiting her from further violations of the Advisers Act, and that Camarco be required to pay disgorgement of any ill-gotten gains, plus pre- and post-judgment interest.  Finally, the complaint requests that Camarco be required to pay civil money penalties.

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