Federal regulators filed a civil lawsuit charging a La Mesa financial adviser with selling unregistered real estate securities to investors in what turned out to be a Ponzi scheme.
The U.S. Securities and Exchange Commission is seeking the return of sales commissions, civil penalties and other measures against Robert Joseph Armijo and his company, Joseph Financial.
According to the SEC, Armijo served as an independent sales agent for investments managed by Florida-based EquiAlt LCC from 2016 until early 2020, when the SEC intervened against the operation.
EquiAlt promised to use investor money to purchase real estate in distressed markets, and these properties would generate enough revenue to pay investors an 8 percent to 10 percent annual return.
But EquiAlt was unprofitable almost from inception, according to the SEC, and used new investor money to pay interest to earlier investors in a classic Ponzi scheme.
Overall, EquiAlt snared 1,100 investors for a total of $170 million across the country. Many of the investors were elderly and used their retirement account funds to invest in EquiAlt real estate debentures, according to court documents.
The SEC alleges Armijo told investors the EquiAlt investment was low risk. He sold $4.85 million in these securities to more than 50 investors in Arizona, California, Texas and Oregon, receiving commissions on the deals of about $1.1 million.
Efforts to reach Armijo and Joseph Financial were unsuccessful. The lawsuit in San Diego Federal Court alleges that EquiAlt’s debentures should have been registered as securities with the SEC but were not. Armijo and Joseph Financial lacked the required registered broker-dealer authority to sell such securities.
The SEC’s investigation is continuing and is being supervised out of its Miami regional office. The Arizona Corporation Commission has aided the probe.
This article originally appeared on The San Diego Union-Tribune.
