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Execs of Defunct Irvine Firm Accused of $4.3-Million Fraud

Investigation: Face to Face Financial officials settle with SEC. The commission's order doesn't require them to repay investors.


The president and three executives of a defunct Irvine videoconferencing technology company were accused by federal regulators of fraudulently raising $4.3 million from about 400 investors nationwide, officials said Monday.

David C. Erickson, who led the money-raising efforts for Face to Face Financial Inc., and the three others immediately settled with the Securities and Exchange Commission by agreeing not to violate federal securities laws in the future. Three of the men also were suspended from the securities industry for three months to three years.

A separate criminal investigation by the U.S. attorney in Los Angeles is underway, but no charges have been filed.

Also named in the SEC action were Paul A. Barrios, the company's sales manager; Joseph J. Laferty, its chief executive; and Vincent E. Serhan, the corporate secretary. Face to Face also operated under the name FTF Financial Corp.

The company misled investors about the company's business prospects, falsely claiming its videoconferencing technology had been installed at well-known corporations and banks, according to Kelly Bowers, assistant regional director at the SEC's Los Angeles office.

The executives also falsely claimed to have contracts to sell its technology abroad and failed to disclose Erickson's 1993 bankruptcy, Bowers said.

The company completed four unregistered stock offerings between December 1995 and March 1998.

Federal regulators said the company also bought "lead lists" to cold-call potential investors, a practice that was improper for the type of stock offering FTF was conducting, Bowers said.

Under the settlement, the executives did not admit or deny the accusations.

Attorneys for Erickson, Barrios and Laferty could not be reached for comment. An attorney for Serhan called the settlement appropriate under the circumstances.

As part of the SEC settlement, Erickson was barred from associating with any securities broker or dealer for three years, Barrios was suspended for 12 months, and Serhan was suspended for three months.

The SEC order did not require the executives to repay any of the $4.3 million that investors lost, but the U.S. attorney has seized about $760,000 from FTF's bank accounts. Under a separate settlement announced Monday, most of that money will be forwarded to a government asset forfeiture fund controlled by the U.S. Department of Justice. Investors may be able to recoup their losses by making a claim with the fund.

The government could still seek restitution in its criminal case.

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