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Advisor Craig Rumbaugh Settles With SEC for $1 Million

Advisor Craig Rumbaugh led clients into investments that turned out to be a Ponzi scheme and failed to disclose his commissions.

The Securities and Exchange Commission entered into final judgment against advisor Craig Rumbaugh and his companies, Rumbaugh Financial and Desert Strategic Equity, for more than $1 million, according to an announcement.

Rumbaugh was charged in August 2019 for misleading his clients into faulty investments and failing to disclose conflicts of interest. According to the SEC, Rumbaugh advised his clients to invest in promissory notes offered by Susan Werth, who claimed to offer high interest rate loans to real estate developers but was subsequently convicted of running a Ponzi scheme

Rumbaugh was unaware of the scheme and eight of his clients invested a total of $3 million plus into companies pushed by Werth. Rumbaugh allegedly made a 5% commission of $140,000, which Werth paid, and misrepresented the interest rates on the promissory notes. The advisor told his clients the investments had a lower return than they actually had and then kept the difference.

When the Ponzi scheme fell apart, three of Rumbaugh’s clients lost over $650,000, in total.

Without admitting or denying, Rumbaugh agreed to pay disgorgement fees of $676,000, $137,808 in prejudgment interest and a civil penalty of $192,768. He also agreed to be barred from associating with any financial advisor, securities dealer or rating agency, and he will also agree to not offer any form of a penny stock.

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