The SEC charged that Sandra Venetis of Systematic Financial Associates Inc. in Branchburg, N.J.—one of the state’s upper-income suburbs—preyed on clients who were retired or unsophisticated about investments.

"Venetis abused her position of trust to target older investors who were the most vulnerable to her egregious lies and misrepresentations," said Bruce Karpati, co-chief of the SEC's Asset Management Unit. "The SEC's enforcement action and the settlement reached ensure that she will never work in the securities industry again."

Venetis, who has agreed to a settlement with the SEC that is pending court approval, orchestrated the scheme through the sale of phony promissory notes, which she told clients were tax-free, FDIC-insured and would earn annual interest of 6% to 11% per year, according to the SEC.

She also told investors that she would use their money to fund loans to doctors that would be backed by Medicare reimbursement payments to those doctors, the SEC said.

But Venetis instead used investor funds to pay her personal travel and gambling debts, and to pay off mortgages and property taxes, says the SEC, and gave some of the money to relatives.

The SEC's complaint also targets three defendants for the purposes of recovering investor assets now in their possession: Jennifer Venetis (Venetis's daughter); Kevin Persley (Venetis's brother); and Venetis LLC (an entity owned and controlled by Venetis).

In addition to Systematic Financial Associates, which she founded, Venetis also ran the scheme through two of her other firms: Systematic Financial Services LLC,  an accounting and tax preparation firm, and Systematic Financial Services Inc., an entity Venetis created to conduct the fraudulent offerings, according to the SEC.

Venetis and her firms have agreed to settle the SEC's charges and consent to a court order that freezes their assets and requires monetary payments including financial penalties to be determined at a later date. Venetis also agreed to an SEC administrative action that bars her from future association with any investment advisor or broker-dealer, according to the SEC.