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SEC accuses California men of running $2.18 million home flipping scam

The Securities and Exchange Commission is charging two California men with running a home flipping scam that defrauded dozens of investors out of their retirement savings. According to the SEC, Daniel Vazquez serves as the CEO of Hoplon Financial Group. Through Hoplon, Vazquez created the “New Economic Opportunities Fund,” an entity that purported to buy and flip residential real estate using investor funds. These investments were made on the basis of “misrepresentations” about how much compensation Vazquez and Hoplon would take for running the operation. According to the SEC, Hoplon and Vazquez, with the aid of Hoplon’s then-chief operating officer, Gilbert Fluetsch, allegedly misused most of the investors’ funds funds to pay unrelated business or personal expenses, including approximately $780,000 that was misappropriated since January 2013. “Vazquez and Fluetsch perpetrated this deception by raising money from investors with promises that investor money would be used to purchase and renovate real estate and that Hoplon’s compensation would be strictly limited, while in reality they were draining most of the money from (New Economic Opportunities Fund) accounts for their own purpose,” the SEC alleges in its complaint. According to the SEC complaint, Vazquez and Fluetsch actually did purchase some properties, and were actually successful in turning a profit by flipping those properties, but did not make enough money to cover the money they took for their own use. “Despite its failure to fully invest offering proceeds, (New Economic Opportunities Fund’s) real estate transactions did turn a modest profit. However, the profits obtained by (New Economic Opportunities Fund) were not nearly sufficient to cover the amounts being diverted to Hoplon, Vazquez, and Fluetsch.” The complaint alleges that, by promoting and selling these securities, Hoplon, a state-registered investment adviser, and Vazquez, a registered representative of a broker-dealer, violated federal broker-dealer registration provisions. The SEC charged Hoplon, Vazquez, and Fluetsch with a number of securities law violations.