SEC Says Ex-Transamerica Rep Used Client Money to Pay His Own Bills

At least seven people allegedly gave Fries a total of at least $178,000 to invest, according to the SEC's complaint. As alleged in the complaint, Fries "betrayed the trust" of investors and, instead of spending their funds on securities as promised, "misappropriated the investors' funds and spent their money on himself."

All the checks Fries received from investors were "deposited into his own bank accounts [and], within days of receiving money, Fries began using the investors' funds to pay his own personal expenses — such as mortgage payments, payday loans and credit card bills," the complaint claimed.

To cover up his fraud, Fries allegedly created fake account statements, lied to his employer and used a Ponzi-like scheme to repay one couple who demanded the return of their investment, using funds from other investors, the SEC claimed.

Fries allegedly violated the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940, according to the SEC. The complaint seeks a permanent injunction, disgorgement with prejudgment interest and a civil penalty.