The founder of San Diego-based The Patio Group - which operates multiple restaurants around the city including The Patio on Lamont, The Patio on Goldfinch, and Fireside By The Patio, amongst others - has been civilly charged by the Federal Securities and Exchange Commission for allegedly operating a $300 million "egregious fraud."
The United States Federal Securities and Exchange Commission (SEC) has filed a civil complaint and obtained a consented-to asset freeze against San Diego-based ANI Development LLC and its principal Gina Champion-Cain for operating a "multi-year, $300 million scheme that defrauded approximately 50 retail investors." According to a 19-page complaint filed by the SEC this week, beginning in 2012 Champion-Cain's ANI Development raised hundreds of millions of dollars from investors by claiming to offer an opportunity to make short-term, high-interest loans to parties seeking to acquire California alcohol licenses. In truth, the SEC alleges, the investment opportunity was a sham. Contrary to defendants’ representations, the SEC asserts, defendants did not use investor funds to make loans to alcohol license applicants. Instead, Cain directed significant amounts of investor funds to a company she controlled. American National Investments Inc. - the parent company of ANI and approximately 40 other businesses, including restaurants, rental properties, coffee shops and a surfing supply store - is also named as a relief defendant, meaning they could be responsible for any damages originally obtained illegally.
"Defendants provided their investors with forged and fabricated escrow agreements in order to lead them to believe that their investment was secure, and that ANI Development was using their funds - as represented to them - to finance the transfer of a liquor license," the complaint states
“American National Investments, Inc. has been notified of a civil suit brought against the company and anticipate a receiver will be appointed," said a representative of ANI through their public relations firm. "While we can’t discuss details of the ongoing litigation matter, we will continue to cooperate with authorities throughout this process. We do so with full commitment to doing right by our loyal customers and lenders. Our focus remains steadfast: To strengthen communities and create spaces for people to relax, enjoy and share. Our passion for doing so continues unabated."
The SEC’s complaint, filed in federal district court in San Diego on August 28, charges ANI Development with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. Without admitting any violations of federal law, defendants have agreed to preliminary injunctions against violations of these provisions of the federal securities laws, asset freezes, and the appointment of a receiver over ANI to marshal and preserve assets. The stipulated order is subject to court approval. The complaint seeks disgorgement of allegedly ill-gotten gains and prejudgment interest, monetary penalties, and permanent injunctions. Based on the ongoing investigation, the SEC may recommend criminal charges are filed on a state and/or federal level.
The SEC’s ongoing investigation is being conducted by the SEC’s Los Angeles Regional Office. For more information about American National Investments, visit americannationalinvestments.com.
