SEC Charges Maria Dickerson for $7M Ponzi Scheme Targeting Filipino Community

Highlights:

• SEC charges Maria Dickerson with running a $7 million Ponzi scheme targeting Filipino-Americans, promising high monthly returns.
• The SEC’s complaint reveals Dickerson used investor funds for personal expenses and made Ponzi-like payments to earlier investors.
• ClearPath Capital Partners was also charged by the SEC for failing to comply with custody rules and using misleading liability disclaimers.

The Securities and Exchange Commission (SEC) has charged Maria Dulce Pino Dickerson, CEO of Creative Legal Fundings in California, with operating a $7 million Ponzi scheme. The fraudulent scheme targeted over 130 investors, primarily within the Filipino-American community across the United States.

Today we charged Maria Dickerson and her two companies with operating a $7 million Ponzi scheme that targeted the Filipino-American community across the U.S. https://t.co/FobLSQHEcC pic.twitter.com/xvxGO0jZ1x

— U.S. Securities and Exchange Commission (@SECGov) September 3, 2024

Allegations of Fraudulent Activities

According to the SEC’s complaint, between March 2021 and May 2023, Dickerson convinced investors to invest in her company, Creative Legal Fundings. She promised them guaranteed high returns of 10 to 17.5% per month. Dickerson claimed the funds would be used to provide loans to personal injury attorneys to finance their lawsuits. However, Creative Legal Fundings allegedly received a portion of any resulting settlements.

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of California, charges Dickerson, Creative Legal Fundings, and The Ubiquity Group with violating federal securities laws. The SEC aims to obtain permanent injunctions, recover ill-gotten gains, and impose civil penalties. The agency also aims to bar Dickerson from serving as an officer or director of any public company.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of California announced criminal charges against Dickerson. The charges included wire fraud, securities fraud, and money laundering. A federal grand jury has indicted Dickerson on 32 counts, and she pleaded not guilty during a recent hearing. A detention hearing is scheduled for the coming days.

Fraudulent Operations and Lavish Spending

However, the SEC alleges that Creative Legal Fundings did not conduct any legitimate business activities, including making loans or generating returns. Dickerson is accused of redirecting over $2.5 million from investors for personal expenditures. They allegedly included buying real estate, luxury cars, gambling, and high-end merchandise. Additionally, Dickerson reportedly used funds from new investors to pay earlier investors in a Ponzi-like scheme, maintaining the illusion of a profitable operation.

When Creative Legal Fundings ran out of money around May 2023, Dickerson allegedly shut down the company. However, she established The Ubiquity Group LLC, attempting to raise additional funds through similar misrepresentations.

The SEC’s investigation was part of a broader initiative by the San Francisco and Los Angeles Regional Offices to combat affinity frauds, particularly those targeting specific communities. The SEC also released an Investor Alert to help individuals identify and avoid such fraudulent schemes.

ClearPath Capital Faces SEC Charges

Moreover, the SEC also charged ClearPath Capital Partners LLC, a California-based firm. The SEC sanctioned the firm for not adhering to client asset safekeeping rules and using forbidden liability disclaimers in its contracts. 

Today we announced settled charges against ClearPath Capital Partners LLC for failing to comply with requirements related to the safekeeping of client assets & for its use of impermissible liability disclaimers in its advisory & private fund agreements. https://t.co/9JDiJGwL1A pic.twitter.com/3ydM7JnuZ7

— U.S. Securities and Exchange Commission (@SECGov) September 4, 2024

According to the SEC, ClearPath was late in delivering annual audited financial statements to its private fund investors, violating investor protection regulations. Additionally, the firm’s advisory and private fund agreements included hedge clauses that might mislead clients about their rights to challenge the advisor’s actions.

Andrew Dean, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, emphasized the critical nature of the custody rule for investor security. He also cautioned all advisors against incorporating misleading hedge clauses in agreements. As a result of the violations, ClearPath has agreed to a censure, a cease and desist from future violations. They will pay a $65,000 civil penalty without admitting or denying the SEC’s findings.