U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21353 / December 24, 2009
Securities and Exchange Commission v. Homestead Properties, L.P.; Homestead Limited, L.L.C.; California Wealth Management Group, d.b.a. IFC Advisory; Heath M. Biddlecome; William C. Tak, Defendants; and Homestead Northland MHC, LLC and Jackson MHC, L.L.C., Relief Defendants, United States District Court for the Central District of California, Case No. SACV 09-01331 CJC (filed Nov. 12, 2009).
SEC OBTAINS PRELIMINARY INJUNCTION OVER LIMITED PARTNERSHIP MANAGED BY CULVER CITY ADVISER
The Securities and Exchange Commission today announced that it obtained a preliminary injunction against Heath M. Biddlecome ("Biddlecome"), age 41, of Carpentaria, California, his firm California Wealth Management Group, doing business as IFC Advisory ("IFC"), of Culver City, California, a fund created by Biddlecome, Homestead Properties, L.P. ("Homestead"), the general partner of the fund, Homestead Limited L.L.C., and William C. Tak, age 43, of Newport Beach, California, to halt the continuing false disclosures being made by Homestead, Biddlecome, and Tak. The Honorable Cormac J. Carney, United States District Judge for the Central District of California, also granted additional relief that the Commission sought including orders freezing assets, and appointing Robb Evans & Associates LLC as permanent receiver over Homestead.
The Commission's complaint, filed November 12, in federal court in Los Angeles, alleges that Biddlecome established Homestead to invest in mobile home park communities. Rather than investing all of the investors' moneys as represented, Biddlecome, without ever informing investors, transferred $4.5 million of the partnership's moneys to a brokerage account and engaged in day-trading, including trading options, trading on margin, and engaging in short sales. The complaint alleges that this risky day-trading strategy has resulted in erratic performance, alternating between six figure trading losses to profits in various months; in September and October 2009 alone, the account value declined $1.9 million. The complaint also alleges that the defendants falsely claimed that a brokerage firm would sell the partnership interests and an accounting firm would audit the partnership's books yearly. In addition, although investors were told distributions would be made quarterly out of net profits and certain investors received distributions, Homestead suffered losses for two years.
The Commission's complaint charges the defendants with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Rule 10b-5 thereunder, Sections 15(a) and 17(a) of the Securities Exchange Act of 1934, and Sections 204, 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-8 thereunder, and names as relief defendants two entities controlled by Biddlecome, Homestead Northland MHC, LLC and Jackson MHC, L.L.C. The Commission alleges that the relief defendants received ill-gotten gains as a result of Biddlecome's conduct.
On November 16, 2009, the Honorable Cormac J. Carney, United States District Judge, granted the Commission's application for a temporary restraining order against the defendants and issued orders freezing Homestead's assets and prohibiting the destruction of documents. The Judge also appointed Robb Evans & Associates LLC as the temporary receiver over Homestead. The Commission also seeks permanent injunctions, disgorgement, and civil penalties against the defendants.
For further information, see Litigation Release No. 21304 (November 18, 2009).