Federal regulators said Thursday that they obtained a preliminary injunction against two Southern California men accused of defrauding investors who put nearly $10 million into a fund to invest in mobile home parks.
A lawsuit filed by the Securities and Exchange Commission says Heath M. Biddlecome, 41, of Carpinteria diverted nearly half of the money raised and used it for so-called day trading.
The suit names as defendants Biddlecome; his firm, California Wealth Management Group of Culver City; and William C. Tak, 43, of Newport Beach, a senior vice president at the firm.
According to the complaint, filed Nov. 12 in federal court in Los Angeles, Biddlecome set up a fund called Homestead Properties in 2007, ostensibly to invest in mobile home communities, and raised $9.8 million from 36 investors. But the filing alleges that Biddlecome, without telling investors, moved $4.5 million from the fund to a brokerage account in late 2008 and began day-trading with the money, using such risky strategies as option trading and so-called short selling.
U.S. District Judge Cormac J. Carney last week issued a preliminary injunction prohibiting the defendants from engaging in the alleged scheme. The judge earlier froze Homestead's assets and appointed a receiver for the firm.
It's not clear at this point how much money, if any, investors may have lost in the alleged scheme. At least some of the $9.8 million was invested in mobile home parks, according to the receiver. About $565,000 was distributed to investors but it was drawn from other investors' contributions, not from profits, the receiver said.
And although day trading caused "erratic performance" in the brokerage account, it was valued at $5 million when the SEC suit was filed, according to the complaint.
Lawyers for the defendants couldn't be reached for comment.