The Securities and Exchange Commission on Thursday settled its complaint against Philadelphia-based Benchmark Asset Managers LLC for defrauding its clients of approximately $8.7 million in a socially responsible investment-related scam.

As part of a consent agreement, the SEC permanently revoked Benchmark's investment advisor registration, according to a SEC release.Without admitting or denying the allegations in the SEC's complaint, the firm's founder, Sam Otto Folin, and Benchmark also agreed to a final judgment enjoining them from future violations of securities law and to pay disgorgement of $8,706,620 plus prejudgment interest of $1,454,177. In addition, Folin has consented to pay a civil penalty of $150,000 and Harvest and Benchmark have consented to pay civil penalties of $750,000 each. The settlements are subject to court approval.

On July 12 the SEC charged the 62-year-old Folin, a chartered financial analyst; his Philadelphia-based RIA, Benchmark Asset Managers; and its parent company, Harvest Managers LLC, with misappropriating the money from advisory clients, friends and family over eight years.

The SEC found that Benchmark founder Folin had promised to invest clients' money in socially responsible companies but instead using it to pay other investors and fund his business.

Folin's problems started not long after he created a firm in 1999 to advise a pooled investment vehicle for making investments in post-apartheid South Africa, the SEC says. He then created a second entity to make microfinance loans in South Africa with funds he raised from various religious organizations and individuals by issuing promissory notes. But his South African investments were unsuccessful, and in 2000 Folin formed Harvest Managers as a vehicle through which he could pay back the investors in his South African efforts, the SEC claims.

Although Harvest had no operations or significant source of income, Folin recorded the South African debt on Harvest's books as outstanding obligations, says the SEC complaint filed in U.S. District Court for the Eastern District of Pennsylvania. Folin then continuously attempted to generate funds to repay the South African debt by issuing various securities.

According to the SEC's complaint, the fraud ran from approximately 2002 through October 2010. Through a sales pitch touting socially responsible investments with above-market returns, the SEC says, Folin formed, and sold securities of, Harvest, Benchmark and the Safe Haven Portfolios using a portion of the funds raised from new investors to pay off prior investors; other pre-existing debt; and to sustain the operations of Benchmark and Harvest, which included paying Folin's salary and other expenses.

Benchmark and Harvest issued various "notes" to advisory clients, friends and family promising guaranteed above-market interest rates, the SEC alleges. Folin, Benchmark and Harvest assured investors that such notes were conservative and safe. According to the complaint, Folin, Benchmark and Harvest failed to disclose the true uses of those funds and continually misrepresented the value of the notes on quarterly statements.