The Securities and Exchange Commission obtained a temporary asset freeze against a Santa Maria, Calif.-based investment advisor who allegedly defrauded victims of more than $2 million.
In a complaint filed in California federal court, the commission charged Julie Anne Darrah and her firm Vivid Financial Management with stealing about $2.25 million from at least nine clients who hired her as their advisor. In late 2021, the $674 million AUM firm was acquired by Wealth Enhancement Group, where Darrah joined as a senior vice president.
Darrah primarily targeted elderly female advisory clients, including one victim living in a memory care facility.
“Darrah’s misconduct is ongoing because she still retains control of certain client assets and has been actively selling and dissipating the ill-gotten proceeds of her misappropriation,” the complaint read.
Darrah first joined the industry as a rep in 2001 at National Planning Corporation, according to her BrokerCheck profile. She later co-founded Vivid Financial Management in 2015, and served as the firm’s president, according to the commission.
From 2016 through July 2023, Darrah allegedly stole client funds by gaining control of their assets, liquidating their securities and spending the money on personal expenses, luxury cars or on “PC&J,” which operated two restaurants in Santa Maria and Orcutt, Calif. at a loss. (Darrah was a part owner and registered agent of the business.)
To steal funds, Darrah allegedly installed herself as the trustee of clients’ trusts, or created standard letters of authorization that allowed her to transfer funds from clients’ brokerage accounts to their personal bank accounts. (Darrah would also make herself a signatory on those personal accounts.) She also had power of attorney over some clients' property, including over bank and brokerage accounts.
The complaint details allegations centered on multiple clients, though the commission identifies them only with acronyms. Starting in 2015, Darrah advised a 75-year-old widow known as “S.S.,” and eventually became the trustee to her trust, with the power “to manage and invest all of the trust’s property, including S.S.'s bank accounts and brokerage accounts.”
Eventually, Darrah allegedly stole more than $1 million from the client, leaving her with about $87,000 in savings. The client’s only source of income is $1,631 in monthly Social Security payments, and has been living in a memory care facility since April 2022, with monthly expenses of $7,845.
Darrah’s hold on the client is so firm that the facility allegedly requires her to approve visits, even from other family members.
In January 2022, Darrah sold VFM’s advisory business to Wealth Enhancement Advisory Services, the advisory subsidiary of WEG. She retained many of her clients (including S.S. and many of her alleged victims).
But in July 2023, the firm placed Darrah on administrative leave, according to the SEC. By mid-September, the firm fired her after an internal fraud review, accusing her of wrongfully taking client property, violating securities law, firm policies and professional standards, including not cooperating with the firm’s review, according to public filings.
Later that month, WEG filed a suit against Darrah to recover damages to purportedly help make her clients whole. The firm accused Darrah of deceiving them “through the very same fraudulent means that had been deceiving billion-dollar banks, custodians, and others, for many years.”
“Darrah covered her tracks by ingratiating herself into her clients’ family affairs, visiting them at home and assisted living facilities, counseling them as they grieved, accompanying them on medical appointments—all in ways that ran afoul of financial advisor professional boundaries,” the WEG suit alleged.
Darrah could not be immediately reached for comment prior to publication. A WEG spokesperson confirmed Darrah had been "terminated for cause," but said the firm was limited by what it could say because of the ongoing case.
"We are conducting a thorough internal review with support from outside legal counsel and external experts and are cooperating with government authorities in their review of the matter," they said. "The safety and security of our clients’ assets is our number one priority."
Darrah agreed to a preliminary injunction and an order freezing her assets with the SEC as the commission continues to seek disgorgement, prejudgment interest, further penalties and the potential for permanent injunctions.