Diverse Financial and Principals Charged with Fraud
The SEC filed fraud charges against Diverse Financial Corporation, its CEO, Roy Dekel, and its former President David Kendell on October 28, 2015. The complaint claims that the defendants raised about $3.29 million from at least 16 investors through their fraudulent offer and promissory notes that were issued by DF Capital Partners, LLC, which is a bankrupt subsidiary of Diverse Financial. According to the complaint, the defendants lied about their use of the investors funds, saying that their funds would be used only to invest in premium finance lending, where loans are made to borrowers to pay premiums on their life insurance policies, or “short-term cash type investments,” pending such investments. In reality, alleged by the SEC, the company and its CEO diverted the money to pay for the company’s financial operations.
The complaint also claims that Dekel and the Company misappropriated all Diverse Financial Capital investor funds to pay for the Company’s operations and make payments that were Ponzi-like to investors. Kandell is alleged to have been aware of the misappropriation of the investor funds, giving him no reasonable basis for saying that the money was being used exclusively for what was included in the offering materials.
The SEC’s complaint claims that Diverse Financial and Dekel violated the antifraud provisions of the securities laws in Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933 (“Securities Act”). The complaint also alleges that Dekel and Diverse Financial violated Section 20(a) of the Exchange Act as control persons of DF Capital Partners, LLC. Due to his failure to disclose the misappropriation of investor funds, the SEC is also seeking permanent injunctions, civil penalties, disgorgement plus prejudgment interest, and other relief against Kandell as well as the Company and Dekel.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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