The Securities and Exchange Commission has charged a Los Angeles investment advisory firm and its owner with overbilling clients fraudulently and stealing assets from their trusts to fund the owner's lifestyle.

The regulator says that the money went to pay such personal expenses as the owner's home mortgage, overseas trips and leases on two Mercedes-Benz vehicles. The owner's name is Marc Broidy and his firm is Broidy Wealth Advisors, which apparently obtained more than $1.4 million in ill-gotten gains since February 2011.  

Broidy allegedly billed clients approximately $643,000 in excess fees and covered it up by altering the amounts of management fees recorded on forms issued by brokerage firms before sending the forms to his clients. The SEC further alleges that Broidy fraudulently obtained additional funds to pay his personal expenses by misappropriating approximately $865,000 in assets from clients’ trusts for which he was the trustee.

According to the SEC’s complaint, Broidy also misled advisory clients about some investments they made in privately held companies when he didn’t inform them he was affiliated with those companies.

In a parallel action, the US Attorney’s Office for the Eastern District of New York has announced criminal charges against Broidy.

The SEC’s complaint charges Broidy and his firm with breaking s17(a) Securities Act 1933, s10(b) Exchange Act 1934 and SEC Rule 10b-5, as well as ss206(1) and (2) Investment Advisors Act 1940. The SEC is seeking permanent injunctions and penalties against Broidy and his firm and an officer-and-director bar against Broidy.