Daniel Benjamin Vazquez, Senior, of Irvine, California, a stockbroker formerly employed with Cetera Advisors LLC, and founder and chief executive officer of Hoplon Financial Group and New Economic Opportunities Fund I, LLC, has been charged by the Securities and Exchange Commission (SEC) in a Complaint alleging that he engaged in a fraudulent real estate offering. Securities and Exchange Commission v. Daniel B. Vazquez, Sr., Case No. 8:18-cv-00047 (Jan. 12, 2018).

According to the Complaint, in 2011, Vazquez created the New Economic Opportunities Fund I, LLC (NEON) as an investment vehicle intended to pool funds of investors for buying, refurbishing and flipping real estate. Apparently, investors had been provided with NEON’s private placement memorandum and supplements, all of which had been drafted under the supervision of Vazquez and approved by Vazquez after he supplied the terms and conditions for investing.

The investors were reportedly responsible for completing a subscription agreement, where they affirmed that they were accredited investors under Securities Act of 1933 Regulation D. However, the Complaint stated that many investors had not actually met the accredited investor requirements, and did not comprehend what they had been attesting to upon signing the subscription agreements. Vazquez reportedly failed to take any steps to ascertain whether the accreditation status of investors was legitimate.

The Complaint stated that from June of 2011 to May of 2014, $2,180,000.00 in funds belonging to twenty-seven investors had been accumulated by Vazquez for investment in NEON, with many investors’ funds having been transferred from their individual retirement accounts. Apparently, twenty-three of those customers had been Vazquez’s existing or prior customers.

The Complaint alleged that Vazquez then misused NEON funds, causing investors to incur catastrophic losses. Apparently, Vazquez accumulated funds from investors by making promises that their funds would be utilized for buying and renovating real estate and that Hoplon would be limited in terms of its compensation. Apparently; however, most of the funds in NEON’s accounts had been wrongfully diverted to Vazquez and another Hoplon principal; Vazquez reportedly diverted the funds of NEON in order to pay business expenses of Hoplon as well as pay for personal expenses accrued by Vazquez. The Complaint stated that Hoplon was only entitled to $188,197.00 in compensation in return for its management of NEON between January of 2013 to January of 2018; however, $968,436.00 had actually be transferred from NEON to Hoplon and Vazquez.

SEC alleged that misleading and false statements had been made by Vazquez in regards to NEON, in which he claimed that NEON maintained positive performance and was profitable. The Complaint stated that Vazquez’s conduct in that regard served to conceal their misappropriation of investors’ funds and to keep investors from liquidating their positions in NEON. SEC alleged that Vazquez’s conduct was violative of Securities Act of 1933 Section 17(a)(2), Securities Act of 1934 Sections 15(a) and 10(b), and SEC Rule 10b-5.

Prior to SEC’s Complaint, Vazquez was barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on allegations that he failed to comply with FINRA’s request for information about his business activities. Case No. 2016049471201 (June 8, 2016).

FINRA Public Disclosure reveals that Vazquez has been referenced in eight customer initiated investment related disputes pertaining to accusations of his violative conduct during the time that he was associated with Associated Securities Corp., Paulson Investment Company, Inc., Foothill Securities, Investors Capital, and Cetera Advisors, LLC.

Particularly, on July 31, 2002, a customer filed an investment related written complaint involving Vazquez’s conduct, in which the customer sought $8,600.00 in damages based upon allegations of poorly performing over-the-counter equities in the customer’s investment portfolio. Thereafter, on October 1, 2002, a customer filed an investment related written claim pertaining to Vazquez’s activities, where the customer requested $14,000.00 in damages supported by accusations that the customer’s purchase of a variable annuity was not suitable.

On November 19, 2008, another customer brought an investment related written complaint in reference to Vazquez’s conduct, in which the customer sought $30,000.00 in damages founded on allegations that unsuitable equity transactions had been effected in the customer’s account, and Vazquez failed to timely liquidate the customer’s investment portfolio. Thereafter, on April 7, 2016, a customer filed an investment related written complaint pertaining to Vazquez’s activities, alleging that equity transactions had been placed in the customer’s account that were not suitable for the customer.

Another customer initiated investment related arbitration claim involving Vazquez’s conduct was settled for $65,000.00 in damages based upon accusations of negligence, breach of fiduciary duty, misrepresentation omissions, excessive trading, and suitability relating to the customer’s private placement, equity and variable annuity investments. FINRA Arbitration No. 16-02455 (Aug. 29, 2016).

Additionally, a customer filed an investment related written complaint in reference to Vazquez’s conduct, where the customer requested $150,000.00 in damages supported by allegations that Vazquez made unsuitable investment recommendations to the customer concerning a private real estate fund. FINRA Arbitration No. 20120306704-01 (Dec. 13, 2016).

Then, a customer brought an investment related arbitration claim regarding Vazquez’s activities in which the customer sought $230,000.00 in damages founded on accusations of suitability concerning the customer’s direct investment products and equity investments. FINRA Arbitration No. 17-01398 (June 13, 2017). Furthermore, on July 14, 2017, customers filed an investment related written complaint involving Vazquez’s conduct, where the customers requested $500,000.00 in damages based upon allegations that Vazquez sold away from his firm, placed unsuitable transactions, and failed to repay customer loans.

Vazquez’s employment with Cetera Advisors LLC was terminated on May 13, 2016.

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