(HedgeCo.Net) A Laguna Niguel, California investment adviser has been charged with misappropriating client funds and misleading his clients about how their money was invested and how their investments were performing. The SEC is seeking an asset freeze and the appointment of a receiver to prevent any ongoing misappropriation or dissipation of assets.

The SEC’s complaint alleges that Craig Arsenault defrauded clients of his advisory firm, Atlas Capital Management, Inc., who had invested $5.7 million in a company he controlled, ACT Global Investments. According to the complaint, Arsenault solicited investments in ACT, telling his advisory clients that their funds would be used to make secured loans to doctors for the purpose of acquiring medical equipment. The complaint alleges that Arsenault and ACT used client funds instead to make unsecured loans to, for example, a used car dealership, and to acquire undeveloped real estate. As alleged in to the complaint, Arsenault then provided clients with deceptive account statements that made it appear as if these investments were generating substantial income when they were not. The SEC also alleges that Arsenault misappropriated and misused over $1 million of the client money invested in ACT.