The Securities and Exchange Commission has charged two men with allegedly tricking more than 150 investors-many whom were senior citizens-to invest $42 million into a bogus investment venture while the men actually used the money for their business ventures and personal expenses.

The SEC alleges that Bradley A. Holcom of Welches, Ore., and Jose L. Pinedo of San Diego, concocted a fraudulent scheme that used bogus promissory notes. The SEC alleges Holcom offered unsuspecting investors guaranteed monthly interest payments on supposedly safe investment deals, promising that their funds would be used to finance the development of real estate, and that each investment would be fully secured. However, the investments were unsecured and the same property was pledged as collateral on numerous investors' promissory notes, according to the SEC.

The SEC complaint also alleges that Holcom, between 2004 and 2008, was running a classic Ponzi scheme. While Holcom used some of the investors' money to develop real estate, he also relied on the funds to make interest and principal payments on promissory notes as they came due. Holcom also used investor funds for personal use and on unrelated business ventures, according to the SEC. By 2008, as the real estate market declined, Holcom's scheme collapsed. Investors lost principal in excess of $25 million, while about $17 million of the invested funds have been recovered.

The SEC in addition charges that Pinedo, who served as Holcom's bookkeeper and as an officer or manager of Holcom's numerous corporate entities, routinely signed promissory notes and other false and misleading documents that were sent to investors.

Without admitting or denying the SEC allegations against him, Pinedo has agreed to settle the matter, and consented to a final judgment enjoining him from future SEC violations.

The SEC is seeking a permanent injunction, disgorgement plus pre- and post-judgment interest, and civil penalties against Holcom.

To date, no criminal charges have been filed against Holcom or Pinedo, SEC officials said.