A Santa Maria-area investment advisor has reached a deal with federal regulators in a $2.25 million civil fraud she’s accused of committing, agreeing to pay back money she allegedly misappropriated from elderly female clients who put her in control of their finances, according to court documents filed on Wednesday.
In a consent judgment filed in the U.S. District Court for the Central District of California, Julie Darrah reached a deal with the U.S. Securities and Exchange Commission to pay any “ill-gotten gains” she allegedly received from nine clients while working as their investment advisor between November 2016 and July 2023.
Darrah, 50, isn’t required to admit or deny any of the allegations in the SEC’s complaint, which allege violations of the Securities, Securities Exchange and Advisors acts. A final amount, including penalties and interest, has yet to be determined in a judgment by the court.
“Defendant enters into this consent voluntarily and represents that no threats, promises, or inducements of any kind have been made by the commission or any member, officer, employee, agent or representative of the commission to induce defendant to enter into this consent,” the agreement states.
The Homestead, at 105 W. Clark Ave., and Old Town Cup & Crumbs, at 156 Broadway St., as well as Lompoc’s Central Coast Specialty Foods at 115 E. College Ave. announced their “temporary closure” via various social media channels Oct. 24.
The SEC did not immediately respond to an emailed request for comment and Edward M. Robinson, Darrah’s attorney, declined to comment Wednesday on his client’s case.
Darrah is permanently forbidden from selling or offering securities to anyone, including acting as a trustee, according to the agreement. In addition, Darrah agreed to not deduct the penalty from her taxes, not discharge the debt through bankruptcy and waived the right to a jury trial.
Darrah was sued by the SEC in October and accused of orchestrating the scheme to misappropriate millions of dollars from her clients’ bank and brokerage accounts.
SEC officials said Darrah’s scheme started in November 2016, while working as an investment advisor for Arroyo Grande-based Vivid Financial Management Inc., which is also listed as a defendant.
Two of Darrah’s victims included widowed sisters, 75-year-old “S.S” and 78-year-old “M.S.”, according to the complaint.
The complaint states that M.S. and S.S. both hired Darrah to manage their brokerage accounts starting in May 2015 and October of 2015, respectively.
As the investment advisor for S.S., the complaint stated that Darrah had discretionary authority to buy and sell securities for her client’s brokerage accounts, and transfer funds into S.S.’s bank accounts via a standing letter of authorization.
Then, in April 2017, the SEC said S.S. appointed Darrah as a trustee. By the end of the year, Darrah allegedly had S.S’s bank and brokerage account statements sent to her own homes.
By March 2021, Darrah opened a new bank account in the name of S.S.’s trust, making herself the only signatory for the account and using it to misappropriate over $1 million in client assets, the SEC alleged.
In total, the SEC said Darrah transferred more than $631,000 to herself; $190,000 to a local restaurant company in which she is a 33.4% owner; $200,000 to a third party to purchase another business; $3,500 to another client; and $2,240 to VFM.
Darrah also misappropriated more than $578,000 of M.S.’s assets, according to the SEC.
“VFM, the registered investment adviser where Darrah worked when the scheme began, failed to implement the policies and procedures designed to prevent Darrah from carrying out this scheme,” the SEC said in its complaint. “As the president and chief compliance officer of VFM, Darrah aided and abetted VFM in these compliance failures.”
A temporary restraining order was filed “to halt Darrah’s dissipation of assets commingled with funds belonging to the defrauded clients and possibly others,” according to the complaint.
In 2021, VFM was acquired by Wealth Enhancement Group, which sued Darrah in Minnesota federal court last September, alleging that she stole millions of dollars from clients.