The Securities and Exchange Commission charged a registered California-based financial advisor with her role in a $26 million real estate–based Ponzi scheme.
Alexandra H. Cock was the head of Wealth Plus, a firm registered in California from 2003 through December 2020. According to the commission, Cock first began recommending investments in the real estate portfolio of Professional Financial Investors (PFI) and Professional Investors Security Fund (PISF) in the late ’90s when she was a registered rep with an unnamed broker/dealer. PFI was a real estate investment management firm focused on residential and commercial purchases, and owned a direct or indirect interest in about 70 properties (including Judy Garland’s famed $3.5 million Malibu beach house, according to the North Bay Business Journal).
When Cock and PFI founder Kenneth Casey first met, they agreed that Cock would be paid a "referral fee" on each principal investment she brought in, a commission that often exceeded Cock’s typical advisory fee.
Cock would also charge clients invested in PFI securities an annual “maintenance fee”; according to the SEC. Between 2016 and 2020, as the founder of WealthPlus, Cock continued to recommend PFI and PISF securities to advisory clients, allegedly raising more than $2.5 million from dozens of investors.
But the Marin, Calif.–real estate companies were later discovered to be a Ponzi scheme that stole more than $26 million from over 1,300 investors, according to previous SEC charges against former PFI President Lewis Wallach, who succeeded Casey (Casey died of a heart attack in 2020).
According to the commission, PFI told investors their money would be used to invest in real estate managed by the company, but Wallach knew the new funds were being used to pay current investors. The SEC says the scheme reached back to 2007; in 2020, the companies were forced into bankruptcy, according to reporting from the North Bay Business Journal.
In December 2020, Wallach pleaded guilty to federal criminal charges in connection with the scheme and admitted he lied to investors about the health of their investments. That included telling them PFI had “significant reserves” to weather the COVID-19 pandemic. He’d also embezzled more than $26 million from PFI and PISF between 2015 and June 2020, using it for real estate purchases and other personal expenses. In September 2021, Wallach was sentenced to 12 years in prison, according to the DOJ.
In the charges against Cock, the SEC argued she failed to disclose the incentives she had to sell the unregistered PFI securities. Cock could not be reached for comment.
“Cock failed to inform clients that she, through WealthPlus, received a referral fee from PFI that was more than double her typical advisory fee for the first year of a client’s investment in PFI and PISF, and that this created an incentive for Cock to recommend the PFI and PISF investments,” the order read.
Without admitting or denying the findings, Cock agreed to be barred from the industry, and pay $368,232 to harmed investors and a $30,000 civil penalty.