According to the Department of Corporations, the defendants allegedly solicited more than $38 million from at least 500 investors in a variety of speculative real estate ventures through seminars, targeted advertising and cold calling.
Riverside County Superior Court Judge Gloria Conner Trask has issued orders against Alliance Financial Investment Services Inc. and KMProperties LLC of Hemet and San Diego and their president and general manager, Russell Millard, as well as 27 limited-liability companies formed to invest in shopping centers, warehouses, storage facilities and other commercial real estate properties throughout the Southwest and West.
Of the total 27 investment programs, 25 are now in bankruptcy.
The court's orders prohibit the defendants from selling securities without a license, levies penalties and costs of $100,000 and bars the promoters from employment as securities broker-dealers or investment advisers for five years.
The seniors were given free lunches to listen to investment pitches in which they were told that the investments were "risk free," had a guaranteed minimum return of 10% to 20% and that no investor had ever lost a dime with their investments.
What the investors were not told, however, according to the complaint, was that the management fees and costs might amount to as much as 60% of their investments. Investment funds, meanwhile, were being commingled with the investment funds of the other entities, while many of the promissory notes the senior investors were given were not secured by properties.
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