A West Palm Beach, Fla.-based hedge fund advisory firm and its founder have been charged by the SEC with illegally funneling $17 million from the fund and using some of the money for themselves.

According to the SEC complaint, Weston Capital Asset Management LLC and its founder and president, Albert Hallac, illegally drained more than $17 million from a hedge fund they managed and transferred the money to a consulting and investment firm known as Swartz IP Services Group Inc.

Investors were given false account statements and not told of the transfer of funds. Weston Capital’s former general counsel Keith Wellner assisted in the activities and Hallac’s son, Jeffrey Hallac, also profited from the scheme, the SEC says.

Both Hallacs and Wellner received $750,000 in payments from Swartz IP. Weston Capital and Hallac also wrongfully used $3.5 million to pay down a portion of a loan from another fund managed by the firm.

“Investment advisers owe their clients a fiduciary duty of utmost good faith and full disclosure about what they’re doing with their money,” says Eric I. Bustillo, director of the SEC’s Miami regional office.  “Weston and Hallac dishonored that duty with Wellner’s assistance by secretly steering investor proceeds to a third party and then pocketing some of those funds.”

Weston Capital, both Hallacs, and Wellner agreed to settle the SEC’s charges.  The court will determine monetary sanctions for Weston Capital and Albert Hallac at a later date. Wellner and Jeffrey Hallac each agreed to pay $120,000 in disgorgement.

According to the SEC’s complaint filed in U.S. District Court for the Southern District of Florida, Weston Capital managed more than a dozen unregistered hedge funds in early 2011 with combined total assets of approximately $230 million.