12.11.2009 The SEC issued an order against Moises Pacheco based on the entry of a permanent injunction against Pacheco in the civil action entitled SEC v. Pacheco, No. 09-CV-1355-W-RBB (S.D. Cal.). The SEC alleges that on November 19, 2009, the district court entered a judgment against Pacheco, permanently enjoining him from future violations of federal securities laws. The SEC further alleges that Pacheco was an officer and the sole director of Advanced Money Management, Inc. (AMM), a Nevada corporation, and controlled Business Development & Consulting Co. (BD&C), a California corporation; that AMM was the investment adviser to and general partner of AP Premium Value Fund I, a Nevada limited partnership, and BD&C was the investment adviser to and managing member of AP Premium Value Fund II, AP Premium Value Fund III, AP Premium Value Fund IV, and Capital Partnership Group, all of which are California limited liability companies; and that through his control of AMM and BD&C, Pacheco controlled and acted as investment adviser for all of the AP Premium Value Funds and CPG (the Funds), including making all investment decisions on their behalf.
The SEC further alleges in the Order that the SEC’s complaint in the civil action alleged that from January 2005 through June 2008, Pacheco, through AMM and BD&C, raised more than $14.7 million from more than 200 investors in the Funds. Pacheco told Fund investors that he had developed a lucrative investment strategy involving the purchase and sale of covered call options. Pacheco claimed that the Funds had generated returns ranging from 2.5% to 4% per month during their existence, and continued to claim that they generated returns in that range until January 2008, when he reduced the returns to 1.25% per month. In reality, from January 2005 through June 2008—a span of 42 months—the Funds had net profits of $367,001 on the millions of dollars under their management, a return of about 1% per year. During the same time period, the Fund paid out more than $9.7 million in purported monthly profits to Fund investors. To bridge the enormous difference between the actual profits and the ersatz ones, Pacheco drew upon the only financial resource available to him—investor principal. Thus, Pacheco’s representations that the monthly payments were funded with trading profits were false. In addition, Pacheco failed to disclose that he had dissipated a substantial portion of investor monies through a series of illicit transfers.
A hearing will be scheduled before an administrative law judge to determine whether the allegations contained in the Order are true, to provide Pacheco an opportunity to dispute the allegations, and to determine what, if any, remedial action is appropriate and in the public interest.
Click http://www.sec.gov/litigation/admin/2009/ia-2960.pdf to access the order.