The Securities and Exchange Commission has filed civil charges against Julie Darrah and Vivid Financial Management, the wealth management firm she co-founded, for allegedly stealing $2.25 million from at least nine elderly female advisory clients.
The SEC action comes about a month after Darrah, 50, of Santa Maria, Calif., was sued by advisor aggregator Wealth Enhancement Group, which acquired Vivid in 2021 with much fanfare but now accuses Darrah of being a thief who preyed on and stole millions of dollars from older clients.
The SEC’s case mirrors many of the accusations contained in the Wealth Enhancement lawsuit, with the agency’s complaint alleging that Darrah, starting in November 2016 or possibly earlier, mainly targeted elderly females—”many of whom had come to rely on Darrah for their financial well-being, including one client who lives in a memory care facility.”
The SEC complaint went on to say that Darrah gained control of her victim’s assets by becoming trustee of her clients’ trusts or the signatory on their bank accounts, or by obtaining power of attorney over their property and accounts. From 2016 to 2023, clients lost about $2.25 million through the schemes, the agency said.
The victims included two elderly sisters: a 75-year-old widow from whom Darrah misappropriated more than $1 million and a 78-year-old widow who lost about $578,000 through Darrah’s fraud, according to the SEC complaint.
The younger sister, who lost $1 million in the scheme, now has a little more than $87,000 left in her accounts and depends on her Social Security checks of about $1,631 per month, the SEC said. The woman “has been living in a memory care facility since April 2022, where her monthly expenses are $7,845 per month,” the complaint said.
Darrah stole clients’ money mainly by liquidating most of their securities, the SEC said.
“Darrah transferred her victims’ money to her personal bank accounts, where she commingled the funds with her own money that she used to buy and improve real properties, pay her personal expenses, buy luxury vehicles, and buy and operate restaurant businesses at a loss,” the SEC said.
The complaint, announced by the SEC today, was filed on Friday in the U.S. District Court for the Central District of California. Darrah is charged with multiple violations of the Securities Act of 1933 and the Investment Advisers Act of 1940. The complaint seeks disgorgement of allegedly ill-gotten gains, prejudgment interest, monetary penalties, and permanent and conduct-based injunctions, the SEC said.
A relief defendant named in the SEC complaint is PC&J, a firm in Orcutt, Calif., of which Darrah is a 33.4% owner, according to the SEC. Darrah allegedly diverted client money to the company, which operates two restaurants in Santa Maria and Orcutt, the agency said.
The Santa Barbara news site Noozhawk reported yesterday that four local businesses associated with Darrah and PC&J had suddenly closed, including a coffee shop called Cups & Crumbs and a deli called The Homestead.
The SEC said in its press release, “Darrah agreed to the entry of a preliminary injunction against her as well as an order freezing assets, requiring an accounting, prohibiting the destruction of documents, and granting expedited discovery, which the district court entered on [Friday].”
The agency claimed Darrah tried to hide her scheme by “changing client account mailing addresses to her own address, falsely disclosing that she was not acting as the trustee for any clients, and having a client initial two backdated promissory notes that Darrah provided to the SEC in response to its subpoenas.”
She further concealed the scheme by, among other things, changing client account mailing addresses to her own address, falsely disclosing that she was not acting as the trustee for any clients, and having a client initial two backdated promissory notes that Darrah provided to the SEC in response to its subpoenas, the agency said.
The accusations against Darrah are a sharp departure from the way she was portrayed when Wealth Enhancement Group, an influential RIA aggregator based in Minneapolis, added Vivid Financial to its network two years ago. Back then, Wealth Enhancement presented her as a role model who served on the board of her local senior citizens center and a friend to small businesses in her area.
In its lawsuit, however, Wealth Enhancement alleged that it came to find out that Darrah actually used her community roles to win over the trust of her mostly elderly fraud victims.
“For vulnerable clients, Darrah was more than a financial advisor,” the company said in a recent court document. “She spent many years—for some clients, over a decade—gaining their trust by incrementally inserting herself into their lives as ‘the daughter they never had.’”
The SEC noted in its complaint that Darrah and other owners of Vivid sold the advisory business in 2022 (in reference to the Wealth Enhancement deal; the Minnesota firm is not mentioned by name in the complaint). She remained associated with the aggregator as a senior vice president until July 2023, when the firm placed her on administrative leave, the SEC said. The firm terminated its relationship with Darrah in September, the agency said.
Darrah could not be reached for comment.