A news release from the US Securities and Exchange Commission (SEC) named Jon James, 29, of Manhattan Beach, California, and several companies he controls, including Jon W. James & Associates (JWJA), based in El Segundo, California
According to the SEC’s complaint, James solicited investors through JWJA with direct mail invitations to free dinner seminars, since at least January 2004, that focused on retirement planning. As alleged in the complaint, the invitations included statements, such as “Retirement Secrets of the Rich: What your Accountant and Stockbroker don’t want you to know.”
The SEC news release said the invitations and seminars claimed JWJA would help investors retire “in just seven short years” by investing their IRA funds “to take advantage of the booming real estate market” and “to produce double-digit returns.”
James fraudulently told investors that their funds would be used for profitable real estate transactions that would provide returns, which at times were represented to be as high as 24%, the SEC statement said. The complaint alleged the defendants offered and sold promissory notes and, later, interests in limited liability companies.
According to the SEC, throughout 2004 and 2005, defendants did not purchase any real estate or real estate related assets from which to pay investor returns. Also, the complaint alleges that the defendants misrepresented to investors that their investments would be secured by real property, or by funds owed to JWJA from real estate transactions. The complaint also alleges defendants fraudulently failed to disclose that they used new investor money to pay returns to previous investors.
The SEC said that US District Judge Florence-Marie Cooper of the US District Court for the Central District of California, appointed a temporary receiver over the companies controlled by James and also froze his assets.
Randall Lee, director of the SEC’s Pacific Regional Office in Los Angeles, said in the news release, “As set forth in the Commission’s complaint, the defendants in this case pitched free dinner and retirement planning seminars to potential investors. At these ‘free’ seminars, they promised unrealistically high rates of return in order to entice investors to transfer their IRA savings to the defendants for investment in purported businesses, which were largely non-existent.”
In addition to James and JWJA, also named in the SEC’s complaint are:
- J.W. James Borrowing Entity
- J.W. James Investment Group Fund One
- The James Company Fund I
- The James Company Borrowing Entity
- Virtual Cash Flow Corporation
- The Cloaking Device
- J.W. James Acquisitions.