LOS ANGELES (CN) – David Williams, the former president and CEO of Morgan Peabody, misappropriated “millions of dollars” in three fraudulent securities offerings, and was “the sole owner of the two issuers of the offerings,” the SEC says in Federal Court.
The SEC also sued WFG Holdings and Sherwood Secured Income Fund – the two issuers – and the Williams Financial Group LLC. It says Morgan Peabody registered reps sold $9 million in WFG and Sherwood debentures and promissory notes from January 2007 through September 2008.
“Sherwood investors were told that at least 90% of funds raised in the Sherwood offerings would be used for direct or indirect investment in real estate and that no more than 10% of the proceeds would be used for non-real estate related investments,” according to the complaint.
The complaint continues: “Contrary to what was disclosed to investors, Williams misappropriated millions of dollars raised in the three offerings to fund his lavish lifestyle. Williams transferred the funds to his personal accounts both directly from the bank accounts of WFG Holdings as well as through the accounts of Morgan Peabody and Williams Financial Group LLC, a limited liability company in which Williams is sole member. Moreover, well in excess of 10% of the funds raised in the Sherwood offering were used for non-real estate related investments. In 2008, Morgan Peabody’s broker-dealer business, which was to be funded by the WFG Holdings offering, ceased operations.”
The SEC seeks disgorgement, penalties and an injunction.