A “five-star” Orange County, Calif., advisor has settled SEC litigation alleging that he orchestrated a $71 million scheme to defraud his clients.
William M. Jordan of Laguna Hills, Calif., settled civil fraud charges in U.S. District Court for the Central District of California in Los Angeles on Tuesday, according to an announcement by the U.S. Securities and Exchange Commission.
The SEC charged Jordan with fraud violations of the Advisers Act, the Exchange Act and the Securities Act. In settling the charges, Jordan accepted a permanent injunction against his behavior without admitting or denying the facts ot he SEC’s complaint, with disgorgement, prejudgment interest and civil penalties to be determined by the U.S. District Court.
The SEC lawsuit alleged that Jordan raised $71 million from about 100 clients between 2011 and 2016 for 16 private investment funds, lying to investors about how their funds would be invested, investment performance and his disciplinary history.
Jordan was once recognized as a “five-star” wealth manager by Crescendo Business Services, an independent professional organization that claims to choose honorees based on regulatory, customer and peer evaluations.
Jordan is also the author of “The Seven Percent Solution,” a book purported to offer strategies that produce 7 percent annual returns.
In August of 2017, California state securities regulators revoked Jordan’s license. The state’s complaint alleged that, in addition to charging artificially higher fees based on inflated account values, Jordan failed to disclose losses to his clients and sold unregistered securities. Jordan settled the state’s charges without admitting or denying their findings.
The state’s complaint identifies most of Jordan’s strategies as private real estate offerings managed by Jordan himself.
While Jordan allegedly told investors that he would invest in profitable businesses, fixed-income alternatives or beachfront property, his main investment was in trust deeds, according to the civil complaint.
According to the SEC, Jordan misrepresented the value of the assets in his funds, using inflated values and unrealized profits to overpay management fees and bonuses to himself and firms he controlled. The SEC also alleged that Jordan improperly commingled investor funds, using “pervasive” inter-fund transfers in part to help distribute cash to his investors in a Ponzi-like scheme.