SEC Obtains Emergency Relief Freezing Assets of Investment Adviser Charged with Defrauding Elderly Clients

The Securities and Exchange Commission (SEC) has announced the filing of charges and a mutually agreed-upon asset freeze against an investment adviser based in Santa Maria, California. This adviser, identified as Julie Anne Darrah, is alleged to have defrauded her clients of more than $2 million.

According to the SEC’s complaint, Darrah and her firm, Vivid Financial Management, Inc. (VFM), misappropriated approximately $2.25 million from at least nine clients who had engaged Darrah and VFM as their investment advisers. The complaint contends that Darrah primarily targeted elderly female clients, many of whom had entrusted her with their financial well-being. This included a client residing in a memory care facility. Darrah allegedly gained control of her victims’ assets through various means, such as assuming the role of trustee for their trusts, employing standing letters of authorization to transfer funds from their brokerage accounts to their bank accounts, becoming the signatory on their bank accounts, and obtaining power of attorney over their assets and accounts.

The complaint further asserts that Darrah moved her victims’ funds into her personal bank accounts, commingling these assets with her own money. She reportedly used these funds to purchase and enhance real properties, cover personal expenses, acquire luxury vehicles, and operate restaurant businesses at a loss. To conceal her fraudulent activities, the complaint alleges that Darrah took measures like changing client account mailing addresses to her own address, falsely denying that she was acting as a trustee for clients, and having a client initial backdated promissory notes in response to the SEC’s subpoenas.

The SEC’s complaint, filed on October 20, 2023, in the U.S. District Court for the Central District of California, charges Darrah and VFM with violations of various sections of securities laws, including the Securities Exchange Act of 1934, the Securities Act of 1933, and the Investment Advisers Act of 1940. VFM is specifically charged with violating certain sections of the Advisers Act, and Darrah is accused of aiding and abetting VFM’s primary violations.

The complaint seeks remedies that include the disgorgement of wrongfully obtained gains, prejudgment interest, monetary penalties, and permanent and conduct-based injunctions. Darrah has consented to a preliminary injunction against her, as well as an asset freeze order. This order requires an accounting, prohibits the destruction of documents, and grants expedited discovery, as entered by the district court on October 20, 2023.