SEC Goes After Money Managers that Defrauded College Coaches

On August 1, 2011, the Securities and Exchange Commission (“SEC”) filed suit in the United States District Court for the Southern District of Texas, Houston Division alleging that Brian Bjork and David Salinas (now deceased) illegally developed a scheme to defraud more than one hundred investors of $39 million through the sale of bogus corporate bonds.  It has been widely reported that dozens of high-profile college basketball coaches invested substantial sums of money with Salinas and Bjork and have reportedly lost more than $7.8 million.  Salinas and Bjork “lulled” investors into believing the investments were safe and promised returns of up to 9%.  The suit further states that Salinas and Bjork developed a seven-year scheme in which they sold corporate bonds that did not exist.  Salinas and Bjork even provided fraudulent account statements to investors for corporate bonds that did not exist.

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