SEC v. Julie Anne Darrah; Vivid Financial Management, Inc.; and PC&J Joint Ventures, LLC, No. 2:23-cv-008843-CAS, Central District of California (Oct. 25, 2023) — Complaint

1  DOUGLAS M. :MILLER (Cal. Bar No. 240398)
Email: [email protected]
2  KELLY C. BOWERS (Cal. Bar No. 164007)
Email: [email protected]
3
Attorneys for Plaintiff
4  Securities and Exchange Commission
Katharine E. Zoladz, Associate Regional Director and
5  Acting Co-Regional Director
Gary Y. Leung, Associate Regional Director
6  444 S. Flower Street, Suite 900
J,9$ Agel$.,g@lip,mtg,99o71
7  Telephone: 323) 965-3998
Facsimile: (€  13)443-1904
FILED
CLERK, U.S. DISTRICT COURT
I OCT20 2023
CENTRAL DISTRICT OF CALIFORNIA
v: EEEEPvr
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SECURJTIES ANDEXCHANGE
COMMISSION,
Plaintiff,
vs.
JULIE ANNEDARRAH and VIVID
FINANCIALMANAGEMENT, INC.,
Defendants, and
PC&J JOINT VENTURES, LLC,
Relief Defendant.
Case No.
COMPLAINT
(FILED UNDER SEAL)
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Western Division
2:23-CV-08843-CAS-AGR.x

 
 
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Plaintiff Securities and Exchange Commission (“SEC”) alleges: 
JURISDICTION AND VENUE 
1. The Court has jurisdiction over this action pursuant to Sections 20(b), 
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 
77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 
Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 
78u(d)(3)(A), 78u(e) & 78aa(a), and Sections 209(d), 209(e)(1) and 214 of the 
Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-9(d), 80b-
9(e)(1) & 90b-14. 
2. Defendants have, directly or indirectly, made use of the means or 
instrumentalities of interstate commerce, of the mails, or of the facilities of a national 
securities exchange in connection with the transactions, acts, practices and courses of 
business alleged in this complaint.  
3. Venue is proper in this district pursuant to Section 22(a) of the Securities 
Act, 15 U.S.C. § 77v(a), Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), and 
Section 214(a) of the Advisers Act, 15 U.S.C. § 80b-14, because certain of the 
transactions, acts, practices and courses of conduct constituting violations of the 
federal securities laws occurred within this district.  In addition, venue is proper in 
this district because defendant Julie Anne Darrah (“Darrah”) resides in this district, 
and because defendant Vivid Financial Management, Inc. (“VFM”) and relief 
defendant PC&J Joint Ventures, LLC (“PC&J”) have their principal places of 
business in this district. 
SUMMARY 
4. This emergency action concerns Darrah’s scheme to misappropriate 
millions of dollars from the bank and brokerage accounts of her clients and spend 
those funds on herself and on relief defendant PC&J, an ailing restaurant company 
that Darrah co-owns.  In doing so, Darrah abused her position as an investment 
adviser to the clients that she stole from, and violated the fiduciary duties she owed 

 
 
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those advisory clients.  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.     
5. The scheme began in at least November 2016, if not earlier, while 
Darrah was still working for VFM, which was at the time an SEC-registered 
investment adviser partially owned by Darrah and where she served as its president 
and chief compliance officer.  Darrah primarily targeted elderly female advisory 
clients for the scheme, many of whom had come to rely on Darrah for their financial 
well-being (“the defrauded clients”).  Indeed, in addition to giving Darrah 
discretionary authority over their brokerage accounts, many of the defrauded clients 
appointed Darrah to serve as a trustee over the trusts they had established for 
themselves, while others gave Darrah power of attorney to handle their financial 
affairs.   
6. Instead of honoring the fiduciary duty that she owed as an investment 
adviser to act in the best interest of the defrauded clients, Darrah began stealing from 
them by funneling money out of the defrauded clients’ brokerage and bank accounts 
and taking those funds for herself and relief defendant PC&J.   
7. In total, between November 2016 and July 2023, Darah misappropriated 
approximately $2.25 million in funds from the accounts of nine defrauded clients 
who hired VFM and Darrah as their investment adviser. 
8. The fact that Darrah had custody of the defrauded clients’ assets also led 
VFM to violate what is known as the Custody Rule.  Under that rule, an investment 
adviser cannot have custody of client funds or securities unless the adviser, among 
other things:  (1) provides clients with notice of any custodial accounts opened on 
clients’ behalf, (2) has a reasonable basis for believing that clients will get at least 
quarterly statements from those qualified custodians and (3) ensures that client 
accounts are subject to annual surprise examinations to verify that client funds and 
securities are in the accounts.  Darrah aided and abetted VFM in its violation of the 

 
 
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Custody Rule by carrying out the scheme in the manner that she did. 
9. VFM, the registered investment adviser where Darrah worked when the 
scheme began, failed to implement the policies and procedures designed to prevent 
Darrah from carrying out this scheme.  As the president and chief compliance officer 
of VFM, Darrah aided and abetted VFM in these compliance failures.  For example, 
VFM’s compliance manual claimed that it would “take measures” to avoid VFM 
personnel like Darrah from serving as a trustee for client accounts and claimed that it 
would take measures to ensure that clients received their quarterly account statements 
from the custodians of their funds.  Had these policies been enforced, Darrah’s fraud 
may well have been detected earlier, or even prevented.  VFM clearly failed to 
implement these policies and procedures because for several years Darrah was able to 
do both things that VFM claimed it would take measures to “avoid,” and she was able 
to do it with respect to multiple clients.   
10. Similarly, the Forms ADV and Client Brochures that Darrah submitted 
to the SEC on behalf of VFM during the scheme contained false and misleading 
statements regarding VFM’s custody of its clients’ assets.  For instance, VFM’s 
Client Brochures claimed that its personnel would not have custody of their clients’ 
funds or their securities, and that VFM would make sure that clients “receive at least 
quarterly account statements directly from their custodians.”  These statements in 
VFM’s SEC filings were materially false and misleading because Darrah did, in fact, 
have custody of more than $2 million of the defrauded clients’ assets and was able to 
take steps to prevent them from getting the quarterly statements from the custodians 
that would have showed this.   
11. By engaging in this conduct, Darrah and VFM violated Section 17(a)(1) 
of the Securities Act, Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) 
thereunder, and Sections 207 and 206(1) and (2) of the Advisers Act; VFM violated 
Section 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-7 thereunder; and 
Darrah, pursuant to Section 209(f) of the Advisers Act, aided and abetted VFM’s 

 
 
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violation of Section 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-7 
thereunder. 
12. To prevent future violations of these federal securities laws, to disgorge 
all ill-gotten gains for the benefit of the defrauded clients, including any unjust 
enrichment that relief defendant PC&J received from the scheme, and to punish 
violations of the securities laws, the SEC seeks permanent injunctions, disgorgement 
with prejudgment interest, and civil penalties.   
13. To halt Darrah’s dissipation of assets commingled with funds belonging 
to the defrauded clients and possibly others, the SEC further seeks, as detailed in its 
Ex Parte Application for a Temporary Restraining Order and Order to Show Cause, 
the immediate entry of the following: 
(a) A Temporary Restraining Order (“TRO”), which shall remain in 
force until the Court’s resolution of the SEC’s application to convert the TRO to a 
preliminary injunction: 
i. temporarily restraining Darrah from violating Section 17(a) 
of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5, and 
Sections 206(1) and 206(2) of the Advisers Act; and 
ii. temporarily restraining Darrah from directly or indirectly 
participating in the offer, sale, or transfer of any security on behalf of any other 
person or any entity, including in her capacity as a trustee for such other person or 
entity; provided, however that such injunction shall not prevent Darrah from 
purchasing or selling securities for her own personal accounts.  
(b) An order requiring Darrah to provide sworn accounting. 
(c) An order prohibiting Darrah from destroying, mutilating, 
concealing, disposing of or altering documents.  
(d) An order allowing expediting discovery. 
(e) An order freezing: (i) the assets of Darrah; (ii) the assets held for 
Darrah’s direct or indirect benefit; and (iii) the assets subject to Darrah’s direct or 

 
 
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indirect control.  
THE DEFENDANTS 
14. Defendant Julie Anne Darrah, age 50, a resident of Santa Maria, 
California, was VFM’s president, chief compliance officer, and an approximately 
one-third shareholder of VFM from 2015 through 2021.  In January 2022, Darrah and 
the other owners of VFM sold VFM’s investment advisory business to another SEC-
registered investment adviser based in Minnesota (“Minnesota Investment Adviser”).  
Darrah was associated with Minnesota Investment Adviser as a senior vice president 
from January 2022 until July 25, 2023, when Minnesota Investment Adviser placed 
her on administrative leave.  Following an internal investigation into her conduct 
alleged in this complaint, Minnesota Investment Adviser terminated Darrah on 
September 15, 2023. 
15. Defendant Vivid Financial Management, Inc. is a California corporation 
with its principal place of business in Santa Maria, California.  VFM was an SEC-
registered investment adviser from 2015 to January 2022, when it sold its advisory 
business to Minnesota Investment Adviser and terminated its registration with the 
SEC.  VFM remains a corporation in good standing with the State of California.   
THE RELIEF DEFENDANT 
16.    Relief defendant PC&J is a California limited liability company with 
its principal place of business in Orcutt, California.  PC&J operates two restaurants in 
Santa Maria and Orcutt, California.  Darrah is an officer, 33.4% owner, and registered 
agent of PC&J.   
RELEVANT ENTITY 
17.   Minnesota Investment Adviser is a Minnesota limited liability company 
with its principal place of business in Plymouth, Minnesota.  Minnesota Investment 
Adviser is dually registered with the SEC as an investment adviser and a broker-
dealer.    

 
 
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THE ALLEGATIONS 
A. Darrah’s Advisory Business at VFM and Minnesota Investment Adviser 
18. From 2015 to January 2022, when Darrah and the other VFM owners 
sold VFM’s advisory business to Minnesota Investment Adviser, VFM provided 
investment advisory services to its clients.  During that time period, VFM was an 
investment adviser within the meaning of Section 202(a)(11) of the Advisers Act, 15 
U.S.C. § 80b-2(a)(11), because VFM was engaged in the business of providing, for 
compensation, investment advice as to the value of securities and as to the 
advisability of investing in, purchasing, and selling securities. 
19. From 2015 to January 2022, Darrah was VFM’s president and an owner 
of the firm.  She provided investment advisory services to VFM clients who 
compensated Darrah for that investment advice through VFM.  During that time 
period, Darrah was an investment adviser within the meaning of Section 202(a)(11) 
of the Advisers Act, 15 U.S.C. § 80b-2(a)(11), because she was engaged in the 
business of providing, for compensation, investment advice as to the value of 
securities and as to the advisability of investing in, purchasing, and selling securities.  
20. After the sale of VFM’s advisory business to Minnesota Investment 
Adviser in January 2022, Darrah was associated with Minnesota Investment Adviser 
firm as a senior vice president.  She continued to provide investment advisory 
services to clients in exchange for compensation until July 25, 2023, when Minnesota 
Investment Adviser placed Darrah on administrative leave.  During that time period, 
Darrah remained an investment adviser within the meaning of Section 202(a)(11) of 
the Advisers Act, 15 U.S.C. § 80b-2(a)(11), because she was engaged in the business 
of providing, for compensation, investment advice as to the value of securities and as 
to the advisability of investing in, purchasing, and selling securities. 
21. As investment advisers, Darrah and VFM were fiduciaries for their 
advisory clients.  As such, they owed their clients both a duty of care and a duty of 
loyalty.  Those fiduciary duties obligated Darrah and VFM to serve, at all times, the 

 
 
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best interests of their clients and not subordinate those clients’ interests to their own.  
By engaging in a scheme to misappropriate advisory client assets for her personal 
use, Darrah and VFM breached the duty of utmost good faith they owed to their 
advisory clients, and violated the antifraud provisions of the federal securities laws. 
B. Darrah’s Misappropriation of Client Money 
22. From 2016 to July 2023 (the “relevant period”), Darrah misappropriated 
approximately $2.25 million from nine (9) of her advisory clients (collectively, 
“defrauded clients”).  Across these nine instances, Darrah gained control of defrauded 
client assets, often liquidated defrauded clients’ securities, and then took their money 
for herself, or for the benefit of relief defendant PC&J, a restaurant operator that she 
was an owner of.     
23. As detailed below, Darrah controlled defrauded client assets in several 
different ways:  (1) she was the trustee of their trusts; (2) defrauded clients’ brokerage 
accounts had standing letters of authorization (“SLOA”) authorizing Darrah, as their 
investment adviser, to transfer funds from those brokerage accounts to defrauded 
clients’ bank accounts; (3) Darrah was a signatory on defrauded clients’ bank 
accounts; and/or (4) Darrah had power of attorney over defrauded clients’ property, 
including all of their bank and brokerage accounts. 
1. Defrauded Client S.S. 
24. On or about October 6, 2015, S.S. hired VFM and Darrah to manage her 
personal brokerage accounts and her trust’s brokerage accounts as her investment 
adviser.  At the time, S.S. was a 75-year-old widow.  In January 2022, when 
Minnesota Investment Adviser acquired VFM's business and Darrah joined 
Minnesota Investment Adviser, S.S. became an advisory client of Minnesota 
Investment Adviser.      
a. Darrah’s control of S.S.’s assets 
25. As the investment adviser for S.S. and S.S.’s trust, Darrah had 
discretionary authority to buy and sell securities in S.S.’s brokerage accounts. 

 
 
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26. In addition, a SLOA authorized Darrah to transfer funds from S.S.’s 
brokerage accounts to S.S.’s bank accounts. 
27. In April 2017, S.S. appointed Darrah as the trustee of her trust.  As its 
trustee, Darrah had the power to manage and invest all of the trust’s property, 
including S.S.’s bank accounts and brokerage accounts.   
28. Beginning in October 2017, all of S.S.’s bank account statements were 
addressed to Darrah’s home. 
29. Beginning in November 2017, all of S.S.’s brokerage account statements 
were addressed to another house owned by Darrah. 
30. In March 2021, Darrah opened a new bank account in the name of S.S.’s 
trust.  Darrah was the only signatory for this new bank account, and she had the 
account’s statements addressed to her home. 
b. Darrah’s misappropriation of S.S.’s assets 
31. Darrah used her control of S.S.’s assets to misappropriate $1,057,800 
from S.S. 
32. In the relevant period, Darrah sold nearly all of the securities held in 
S.S.’s brokerage accounts.  Next, Darrah used a SLOA to transfer the proceeds from 
the sale of these securities from S.S.’s brokerage accounts to S.S.’s bank accounts.  
Because Darrah also controlled S.S.’s bank accounts, she was then able to take funds 
out of S.S.’s bank accounts for Darrah’s own benefit.   
33. In all, Darrah transferred $631,975 to herself, $190,000 to relief 
defendant PC&J, $200,000 to a third-party to buy a business then held in Darrah’s 
own name, $3,500 to another advisory client of Darrah’s, and $2,240 to VFM.  In 
addition, from mid-May 2023 to mid-July 2023, Darrah used $30,085 from S.S.’s 
bank accounts to pay for personal charges Darrah had made on S.S.’s credit card.   
34. In the relevant period, VFM still charged and collected $19,093 in 
advisory fees from S.S.’s for Darrah’s investment management services. 

 
 
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c. S.S.’s current financial condition      
35. As of July 31, 2023, S.S.’s bank and brokerage accounts had a total 
balance of $87,032.  Besides her investments, S.S.’s only source of regular income is 
her social security payment of $1,631 per month.  S.S. has been living in a memory 
care facility since April 2022, where her monthly expenses are $7,845 per month.   
2. Defrauded Client M.S. 
36. M.S. is the older sister of S.S.   
37. In May 2015, M.S., then a 78-year-old widow, hired VFM and Darrah to 
manage her personal and her trust’s brokerage accounts as her investment adviser.  In 
January 2022, when Minnesota Investment Adviser acquired VFM's business and 
Darrah joined Minnesota Investment Adviser, M.S. became an advisory client of 
Minnesota Investment Adviser.   
a. Darrah’s control of M.S.’s assets 
38. As M.S.’s investment adviser, Darrah had discretionary authority to buy 
and sell securities in M.S.’s brokerage accounts. 
39. In addition, a SLOA authorized Darrah to transfer funds from M.S.’s 
brokerage accounts to M.S.’s bank accounts.   
40. In 2016, Darrah became a signatory to M.S.’s checking accounts. 
41. In 2019, Darrah became a signatory to M.S.’s savings accounts. 
42. In March 2020, Darrah became a successor trustee of M.S.’s trust.   
b. Darrah’s misappropriation of M.S.’s assets 
43. Darrah used her control of M.S.’s assets to misappropriate $578,400 
from M.S. 
44. In the relevant period, Darrah sold nearly all of the securities held in 
M.S.’s brokerage accounts.  Next, Darrah used a SLOA to transfer the proceeds from 
the sale of these securities from M.S.’s brokerage accounts to M.S.’s bank accounts.  
Because Darrah also controlled M.S.’s bank accounts, she was then able to take funds 
out of M.S.’s bank accounts for Darrah’s own benefit.   

 
 
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45. In all, Darrah transferred $ 515,400 to herself, and $63,000 to relief 
defendant PC&J.   
c. M.S.’s current financial condition 
46. As of July 31, 2023, M.S.’s bank and brokerage accounts had a total 
balance of $24,605.  Besides her investments, M.S.’s only source of regular income is 
her social security payment of $2,027 per month.   
3. Defrauded Client C.H. 
47. In March 2022, C.H. hired Darrah and Minnesota Investment Adviser as 
her investment adviser.  C.H. was an 82-year-old widow at that time. 
a. Darrah’s control of C.H.’s assets 
48. When she hired Darrah as her investment adviser, C.H. also executed a 
power of attorney that appointed Darrah as her agent, and vested in Darrah the power 
to dispose of, sell, and convey C.H.’s real and personal property, including assets 
held in all of C.H.’s bank and brokerage accounts. 
49. In addition, a SLOA authorized Darrah to transfer funds from C.H.’s 
brokerage accounts to C.H.’s bank account. 
50. Then, in late May 2023, Darrah became a co-owner of and signatory for 
C.H.’s bank account.     
b. Darrah’s misappropriation of C.H.’s assets 
51. Darrah used her control of C.H.’s assets to misappropriate $242,000 
from C.H. 
52. From late May 2023 to July 20, 2023, Darrah sold $210,000 of securities 
held in C.H.’s brokerage accounts.  She then used a SLOA to transfer $177,800 of 
those sales proceeds to C.H.’s bank account, which Darrah had become a signatory to 
and co-owner of as of late May 2023.  With her control of that bank account, Darrah 
took C.H.’s funds for her own benefit. 
53. In all, Darrah transferred $236,500 to herself, and another $5,500 to 
another bank account co-owned by Darrah.   

 
 
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4. Defrauded Clients C.H. and C.L. 
54. In May 2015, S.A., then 72 years old, hired VFM and Darrah to manage 
her personal brokerage accounts and her trust’s brokerage accounts as her investment 
adviser.   
a. Darrah’s control of S.A.’s assets 
55. As S.A.’s investment adviser, Darrah had discretionary authority to buy 
and sell securities in S.A.’s brokerage accounts. 
56. In September 2019, S.A. appointed Darrah as the trustee of her trust.  As 
its trustee, Darrah had the power to manage and invest all of the trust’s property, 
including S.A.’s bank accounts and brokerage accounts.  S.A.’s daughters, C.H. and 
C.L., were the trust’s beneficiaries.   
57. S.A. died less than a year later, in April 2020.  S.A.’s daughters, C.H. 
and C.L., became VFM and Darrah advisory clients in May 2020. 
58. In July 2020, Darrah opened, in the name of S.A.’s trust that she 
controlled, a bank account that Darrah also controlled.  Darrah then consolidated 
S.A.’s assets – including funds from S.A.’s bank and brokerage accounts and from 
the sale of her home – in that bank account. 
b. Darrah’s misappropriation of C.H.’s and C.L.’s assets 
59. Darrah used her control of S.A.’s assets to misappropriate $5,793 from 
S.A.’s daughters, C.H. and C.L., who were the beneficiaries of S.A.’s trust.   
60. With all of S.A.’s assets consolidated into a bank account in the name of 
S.A.’s trust, which Darrah controlled as trustee, Darrah transferred $7,900 from the 
account to herself, and the remainder to S.A.’s daughters.   
61. Darrah provided no financial reporting concerning the trust to S.A.’s 
daughters, and they did not know that Darrah had kept $7,900 of S.A.’s assets for 
herself.   
62. Because Darrah separately transferred a total of $2,107 to S.A.’s 
daughters, C.H. and C.L., from her personal account, Darrah took a net of $5,793 

 
 
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from S.A.’s daughters. 
5. Defrauded Client B.C. 
63. At the start of 2020, B.C., then a 79-year-old retired teacher, was also an 
advisory client of VFM and Darrah.  In January 2022, when Minnesota Investment 
Adviser acquired VFM’s business and Darrah joined Minnesota Investment Adviser, 
B.C. became an advisory client of Minnesota Investment Adviser.      
a. Darrah’s control of B.C.’s assets 
64. In September 2020, B.C. executed a power of attorney that appointed 
Darrah as her agent, and vested in Darrah the power to dispose of, sell, and convey 
B.C.’s real and personal property, including assets held in all of B.C.’s bank and 
brokerage accounts. 
b. Darrah’s misappropriation of B.C.’s assets and her efforts to 
conceal that fraud 
65. In August 2021, Darrah asked B.C. to sign a $150,000 check for a 
restaurant Darrah was opening, and B.C. did.   
66. In June 2023, Darrah asked B.C. to sign a check for $50,000 so that 
Darrah could buy a house, and B.C. did. 
67. The $200,000 transferred to Darrah was funded in significant part by 
Darrah’s sale of securities held in B.C.’s brokerage accounts. 
68. Later in September 2023, Darrah went to B.C.’s home and had her initial 
two promissory notes, both backdated: (1) a $150,000 promissory note backdated to 
August 3, 2021; and (2) a $50,000 promissory note backdated to July 15, 2023.   
69. The purported notes stated that Darrah would repay the $150,000 and 
$50,000 in ten years on December 31, 2033, when B.C. would be in her nineties, 
along with interest of 2% per annum.   
70. The backdated promissory notes that Darrah had B.C. initial in 
September 2023 also stated that, “This note is intended as a term of endearment from 
[B.C.] to Julie Darrah.  We agree we have been like sisters for over 20 years.  We feel 

 
 
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as though we are family and this agreement is between family members.”   
6. Defrauded Client B.H.  
71. In November 2021, B.H., then 75 years old, hired Darrah and VFM as 
her investment adviser.  In January 2022, when Minnesota Investment Adviser 
acquired VFM’s business and Darrah joined Minnesota Investment Adviser, B.H. 
became an advisory client of Minnesota Investment Adviser. 
a. Darrah’s control of B.H.’s assets 
72. A month after hiring Darrah as her investment adviser, B.H. created a 
special needs trust for herself, and appointed Darrah the trustee of that trust in 
December 2021.   
73. B.H.’s trust provided that Darrah, as trustee, was to use trust assets “for 
the satisfaction of [B.H.’s] special needs,” which meant “maintaining [B.H.’s] good 
health, safety, education and welfare.”   
74. As its trustee, Darrah had the power to manage and invest all of the 
trust’s property, including B.H.’s bank accounts and brokerage accounts.    
b. Darrah’s misappropriation of B.H.’s assets  
75. Darrah used her control of B.H.’s assets to misappropriate $96,200 from 
B.H. 
76. In 2022, B.H. received an inheritance.  Darrah opened a bank account in 
the trust’s name that Darrah solely controlled.  In January 2022, Darrah deposited the 
$141,618 that B.H. had inherited into that bank account, and then told B.H. that she 
would provide B.H. with money as needed.   
77. However, from February 2022 to mid-June 2023, Darrah took $128,250 
from the trust’s bank account.  Taking into account one payment and a purchase of an 
automobile for B.H. from these funds, Darrah kept $96,200 of B.H.’s assets for 
herself.   
c. B.H.’s current financial condition 
78. As of mid-June 2023, B.H.’s trust bank account had a balance of $1,012.  

 
 
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The account would have had a negative balance but for Darrah’s deposit of $3,500 
that she took from S.S.  
7. Defrauded Client D.C. 
79. In August 2020, L.C. was an advisory client of Darrah and VFM.  At the 
time, L.C. was a widowed 85-year-old retired elementary school teacher.   
a. Darrah’s control of L.C.’s assets 
80. That month, L.C. appointed Darrah as trustee of her trust.  As its trustee, 
Darrah had the power to manage and invest all of the trust’s property, including 
L.C.’s bank accounts and brokerage accounts.   
81. In addition, as L.C.’s investment adviser, Darrah had discretionary 
authority to buy and sell securities in L.C.’s brokerage accounts. 
82. In October 2020, L.C. died.  The trust’s beneficiary was L.C.’s son, 
D.C., who himself became an advisory client of VFM and Darrah.  In January 2022, 
when Minnesota Investment Adviser acquired VFM’s business and Darrah joined 
Minnesota Investment Adviser, D.C. became an advisory client of Minnesota 
Investment Adviser. 
83. In November 2020, Darrah opened a bank account in the L.C. trust’s 
name that she controlled.   
b. Darrah’s misappropriation of D.C.’s assets 
84. Darrah used her control of D.C.’s assets to misappropriate $27,937 from 
D.C., the beneficiary of L.C.’s trust. 
85. In November 2020, through her authority as trustee, Darrah transferred 
$20,000 from L.C.’s brokerage account to the trust bank account that Darrah had 
opened and also controlled. 
86. Separately, in October 2021 and February 2022, Darrah deposited 
another $8,170 into that trust bank account using L.C.’s tax refund and a payment 
from the California teacher’s retirement system.   
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Darrah took $27,937 of those funds for herself by transferring it to her bank accounts.   
88. After repeatedly requesting an accounting of L.C.’s estate, which Darrah 
failed to provide, D.C. terminated Darrah as his investment adviser in 2022.   
8. Defrauded Client P.S. 
89. In March 2019, J.S. was an advisory client of Darrah and VFM.  In 
January 2022, when Minnesota Investment Adviser acquired VFM’s business and 
Darrah joined Minnesota Investment Adviser, J.S. became an advisory client of 
Minnesota Investment Adviser   
90. In March 2019, J.S. created a special needs trust for his brother, P.S., 
and funded the trust with $54,125, his brother’s inheritance from their father’s estate. 
a. Darrah’s control of the special needs trust 
91. J.S. appointed Darrah as trustee for the special needs trust he created for 
his brother P.S. because he wanted a third-party to oversee his brother’s use of his 
inheritance.  As its trustee, Darrah had the power to manage and invest all of the 
trust’s property, including its bank accounts.    
92. In July 2020, Darrah opened a bank account in the name of the special 
needs trust, and deposited $54,125, the inheritance of J.S.’s brother into the account.  
Darrah had sole control over that account.  
b. Darrah’s misappropriation of trust assets 
93. Darrah used her control of special needs trust bank account to 
misappropriate $39,200 from J.S.’s brother, the beneficiary of that special needs trust. 
94. From July 2020 to May 2023, Darrah took $54,100 from the trust’s bank 
03.ccount.  Taking into account payments she later made to J.S.’s brother totaling 
$14,900, Darrah kept $39,200 in trust assets for herself. 
C. Darrah’s Use of Misappropriated Client Funds 
95. In total, between November 2016 and July 2023, Darah misappropriated 
approximately $2.25 million in funds from defrauded clients S.S., M.S., C.H., S.A.’s 
daughters, B.C., B.H., D.C. and J.S.’s brother.   

 
 
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96. Darrah transferred most of this misappropriated money into her personal 
bank accounts, where she commingled stolen defrauded client funds with funds 
relating to Darrah’s other business ventures.  She then used those commingled funds 
to buy and improve properties, pay her personal expenses, buy luxury vehicles, and 
buy and operate food-related businesses at a loss.    
D. Darrah’s Scienter and Negligence 
97. Over the course of years, Darrah repeatedly took money from her 
advisory clients, thus demonstrating her scienter and her negligent conduct.   
98. In addition, Darrah took several steps to conceal the scheme.  These 
steps demonstrate that VFM and Darrah, whose conduct is imputed to VFM, both 
acted with scienter in carrying out the scheme and in violating their fiduciary duties 
to the defrauded clients.  They further show that VFM and Darrah failed to exercise 
the standard of care reasonably expected of investment advisers in carrying out their 
fiduciary duties, including the duty of loyalty and duty of care.   
99. Some of the steps Darrah took that show her scienter and negligence are 
as follows: 
(a) In November 2021, Darrah entered into an agreement on behalf of 
VFM to sell all VFM’s wealth management assets to Minnesota Investment Adviser.  
As part of the asset purchase agreement, Minnesota Investment Adviser agreed to 
hire Darrah as a senior vice president, but she was required to provide Minnesota 
Investment Adviser with certain information as part of the asset purchase agreement 
and her ongoing employment with Minnesota Investment Adviser.  On or about 
November 4, 2021, before the asset purchase agreement closed, a representative for 
Minnesota Investment Adviser asked Darrah whether she served as a trustee for any 
of her VFM advisory clients and, if so, whether she was the trustee on those accounts 
or a successor trustee.  The Minnesota Investment Adviser representative made it 
clear to Darrah that she was being asked these questions as part of its compliance 
obligations.  In fact, this Minnesota Investment Adviser representative was the third 

 
 
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person to ask Darrah this question in connection with the asset purchase agreement.  
On or about November 4, 2021, Darrah sent a response to the Minnesota Investment 
Adviser representative falsely stating that she was “only a successor trustee” and “not 
currently acting as trustee on any of our clients” accounts.  Darrah’s false statement 
was designed to conceal her scheme to misappropriate the victim client’s money, 
many of whom had appointed Darrah as a trustee.   
(b) On or about November 11, 2021, Darrah provided Minnesota 
Investment Adviser representatives with a list of VFM clients for whom she was 
supposedly serving as a “successor trustee,” but the list did not M.S. or B.C., who had 
each appointed Darrah as the successor trustee of their trusts.  The successor trustee 
list Darrah submitted to Minnesota Investment Adviser therefore concealed her broad 
scheme to misappropriate victim clients’ money upon obtaining control over their 
assets.   
(c) On or about February 6, 2023, as part of her employment 
obligations with Minnesota Investment Adviser, a representative of Minnesota 
Investment Adviser asked Darrah to reaffirm that she was still only acting as a 
successor trustee for the individuals she had listed previously and that she was “not 
acting as trustee currently for any clients.”  Once again, Darrah falsely stated, “Yes 
this is accurate.” Darrah’s statement was materially false and misleadingly and 
designed to conceal her scheme to misappropriate the defrauded client’s money.   
(d) On or about February 21, 2023, Minnesota Investment Adviser 
asked Darrah to confirm that she had not borrowed money or securities from any 
advisory clients and had not loaned any money or securities to any advisory clients.  
Darrah affirmed to Minnesota Investment Adviser that same day she had not done 
either of these things.  However, beginning on or about July 17, 2023, and continuing 
through on or about September 26, 2023, the SEC issued several subpoenas to Darrah 
for documents relating to her advisory clients, including S.S. and M.S.  Two of the 
documents Darrah produced to the SEC in response to these subpoenas were 

 
 
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purported promissory notes in which S.S. and M.S. supposedly agreed to loan Darrah, 
their investment adviser, $200,000 and $100,000, respectively, at a two percent 
annual interest rate.  Even if the promissory notes she produced to the SEC are 
authentic, Darrah’s representation to Minnesota Investment Adviser that she had not 
borrowed any money from her advisory clients was therefore false and designed to 
conceal Darrah’s scheme.  In any case, those purported promissory notes did not 
explain the additional $857,800 Darrah misappropriated from S.S., or the additional 
$478,400 Darrah misappropriated from M.S.  
E. VFM Violated the Custody Rule 
100. Rule 206(4)-2 under the Advisers Act provides that it is “a fraudulent, 
deceptive, or manipulative act, practice or course of business” for a registered adviser 
like VFM to have custody of client funds or securities unless the adviser complies 
with certain specified requirements intended to protect client assets from being lost, 
misused, misappropriated (the “Custody Rule”).  
101. The Custody Rule provides that an adviser has custody of client assets if 
it holds, directly or indirectly, client funds or securities, or if it has the authority to 
obtain possession of those assets, including the capacity that gives the adviser legal 
ownership of, or access to, client funds or securities and any arrangement (including a 
general power of attorney or acting as a trustee) under which the investment adviser 
is authorized or permitted to withdraw client funds or securities maintained with a 
custodian upon instruction to the custodian.  
102. An adviser that has custody of client funds or securities must, among 
other things: (1) provide clients with notice of any custodial accounts opened on their 
behalf, (2) have a reasonable basis for believing that clients will get at least quarterly 
statements from those qualified custodians, and (3) have an independent public 
accountant conduct an annual surprise examination to verify clients’ funds and 
securities.   
103. At all relevant times, VFM had custody of the defrauded clients’ assets 

 
 
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due to Darrah (a) being appointed a trustee of the defrauded clients’ trust accounts, 
(b) becoming a signatory on the defrauded clients’ bank accounts and (c) being 
granted power of attorney over the defrauded clients’ assets.  Additionally, VFM had 
custody of the defrauded clients’ assets due to the “Move Money Advisor 
Authorization Form” (sometimes referred to as a standing letter of authorization or 
instruction “SLOA”) the defrauded clients submitted to the broker-dealer for their 
trading accounts, authorizing VFM to move money out of their brokerage accounts 
and into bank accounts over which Darrah had been designated trustee, granted 
power of attorney or for which she had become a signatory on the account. 
104. Despite having custody of the defrauded clients’ assets, VFM 
negligently failed to comply with the Custody Rule.  First, VFM did not inform 
clients in writing of the bank accounts opened and controlled by Darrah.  Second, 
VFM did not have a reasonable basis to believe the custodians of the defrauded 
clients’ assets were sending account statements at least quarterly to the defrauded 
clients.  That is because Darrah had either changed the mailing address on the 
account statements to her residence or a residence she owned and controlled or had 
opened the account using her residence or a residence she owned and controlled.  
Third, VFM did not verify the defrauded clients’ funds and securities through an 
annual surprise examination. 
105. As VFM’s president and part-owner, Darrah aided and abetted VFM in 
its violation of the Custody Rule by gaining custody of the defrauded clients’ assets 
and having the account statements from the custodians of those assets sent to her 
residence or a residence she owned and controlled instead.  Darrah further aided and 
abetted VFM in its violation of the Custody Rule by not engaging any public 
accountant to conduct annual surprise examinations of either the brokerage or bank 
account assets over which VFM had custody.    
F. Darrah and VFM Filed False and Misleading Forms ADV 
106. Section 207 of the Advisers Act prohibits any person from willfully 

 
 
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making “any untrue statement of a material fact in any registration application or 
report filed with the Commission under Section 203 or 204, or willfully to omit to 
state in any such application or report any material fact which is required to be stated 
therein.” 
107. Between in or about March 2017, and in or about December 2021, 
Darrah, as the chief compliance officer of VFM, signed and/or filed approximately 
twenty-two (22) separate Forms ADV amendments and Firm Brochures with the SEC 
on behalf of VFM that contained materially false and misleading statements.  Darrah, 
whose conduct and mental state are imputed to VFM, knew, or acted recklessly by 
not knowing, that the statements she submitted to the SEC on behalf of VFM were 
materially false and misleading at or around the time she submitted them.   
108. The Form ADV amendments that Darrah signed and filed falsely stated 
that in connection with advisory services provided to clients, no VFM related person 
had custody of any advisory clients’ cash, bank accounts, or securities. 
109. These statements were false because Darrah, a related person of VFM, in 
connection with providing advisory services to clients had custody of advisory 
clients’ cash, bank accounts, and securities.     
110. The Firm Brochures Darrah filed from March 2017 to March 2019 stated 
that VFM did not have custody of client assets, its clients received at least quarterly 
account statements directly from their custodians listing the client’s account balance, 
transaction history, and fees, and that it promptly notified clients in writing of the 
contact information for the client’s qualified custodians.   
111. These statements were false because VFM through Darrah did have 
custody of some clients’ assets, not all of its clients received account statements 
directly from the custodians as Darrah had account statements for some clients 
addressed to her home or a home she owned, and VFM did not notify clients in 
writing of the contact information for the bank accounts that Darrah opened for 
certain clients.   

 
 
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112. The Firm Brochures filed from April 2019 to March 2021 stated that 
VFM was deemed to have custody of certain client assets because SLOAs from 
clients gave it authority to disburse money from the client accounts to third parties.  
The Firm Brochures further stated that VFM had adopted certain safeguards to 
protect the clients’ money, including that VFM maintained records showing the 
accounts that received money from clients’ brokerage account pursuant SLOAs were 
not a related party of the investment adviser.   
113. These statements were false and misleading.  The statements were 
misleading because the Firm Brochures failed to disclose all the other ways by which 
VFM and Darrah had custody of certain client assets.  The statements were false 
because the bank accounts that received money from client brokerage accounts were 
related parties of VFM as Darrah had authority over the bank accounts.   
114. Darrah knew, or acted recklessly by not knowing, that the statements 
were materially false and misleading because, as detailed above, she knowingly took 
custody of the defrauded clients’ assets by, in part, becoming a trustee for her 
advisory clients’ accounts and a signatory on her advisory clients’ bank accounts, and 
she had the account statements of the custodians sent to herself instead of her 
advisory clients.   
G. VFM Failed to Implement Its Policies and Procedures 
115. Section 206 of the Advisers Act and Rule 206(4)-7 require registered 
investment advisers like VFM to adopt and implement policies and procedures 
designed to prevent violations of the Advisers Act and its Rules. 
116. VFM negligently failed to adopt and implement policies and procedures 
reasonably designed to prevent VFM or its employees, like Darrah, from using 
advisory client money to benefit themselves.  VFM merely had a policy that, “[a]s a 
fiduciary under the Adviser’s Act [sic], VFM recognize[d],” among other things that: 
“[i]t has an affirmative duty of utmost good faith to act solely in the best interests of 
the Client”; and “[t]he duty to render disinterested and impartial advice.”  VFM, 

 
 
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however, had no procedures in place for implementing those general policies, as 
evidenced by the fact that Darrah misappropriated money from advisory clients for 
her benefit while a representative of VFM.   
117. Further, VFM failed to implement the policies that it did have 
concerning custody of client assets and fulfilling the fiduciary duty that Darrah and 
VFM owed to their advisory clients.   
118. VFM’s compliance manual stated that custody of client assets was 
“generally defined as having direct or indirect access to such assets....  An 
investment adviser who itself or whose related person(s) have custody of Client assets 
is subject to extensive regulation, disclosure, and reporting requirements pursuant to 
Federal and State securities laws and regulations.”  VFM’s compliance manual 
further stated that “VFM takes measure to avoid,” among other things:  VFM 
personnel serving as trustee for client accounts; failing to meet the surprise 
examination requirements; and not having a reasonable basis, after due inquiry, for 
believing that a qualified custodian is sending quarterly account statements to the 
client.   
119. VFM negligently failed to implement these policies and procedures.  For 
example, as described above, while a representative of VFM, Darrah served as trustee 
for several of her advisory client accounts and did so for several years.  Darrah also 
changed the mailing address on several custodian accounts so that her clients stopped 
receiving monthly and quarterly statements from the custodians.   
120. VFM negligently failed to adopt and implement policies or procedures 
with respect to preparing and filing accurate Form ADV amendments and brochures.  
For example, Item 9 of VFM’s Form ADV stated that VFM did not have, in 
connection with the advisory services defendants provided to clients, custody of 
clients’ cash or bank accounts or securities.  These statements were inaccurate 
because Darrah had custody of the defrauded clients’ funds and prevented those 
clients from receiving their account statements from the custodians. 

 
 
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121. As the president and chief compliance officer of VFM, Darrah aided and 
abetted VFM in all of these compliance failures by not adopting or implementing 
these policies and procedures, and by carrying out the scheme in the manner 
described above.   
H. Darrah’s Invocation of Her Fifth Amendment Privilege Against Self-
Incrimination 
122. During the SEC’s pre-filing investigation, Darrah invoked her privilege 
against self-incrimination under the Fifth Amendment to the U.S. Constitution and 
refused to answer any questions concerning her conduct alleged in this complaint.   
FIRST CLAIM FOR RELIEF 
Fraud in the Connection with the Purchase and Sale of Securities 
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) 
(against All Defendants) 
123. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 
124. As alleged above, defendants Darrah and VFM knowingly or recklessly 
engaged in a scheme to defraud their clients, and engaged in acts, practices or courses 
of business that operated as a fraud upon their clients, by misappropriating the 
defrauded clients’ funds and transferring them into accounts controlled by defendant 
Darrah. 
125. By engaging in the conduct described above, defendants Darrah and 
VFM, and each of them, directly or indirectly, in connection with the purchase or sale 
of a security, by the use of means or instrumentalities of interstate commerce, of the 
mails, or of the facilities of a national securities exchange:  (a) employed devices, 
schemes, or artifices to defraud; and (b) engaged in acts, practices, or courses of 
business which operated or would operate as a fraud or deceit upon other persons, 
with scienter. 
126. By engaging in the conduct described above, defendants Darrah and 

 
 
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VFM violated, and unless restrained and enjoined will continue to violate, Section 
10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a) and 10b-5(c) 
thereunder, 17 C.F.R. §§ 240.10b-5(a) & 240.10b-5(c). 
SECOND CLAIM FOR RELIEF 
Fraud in the Offer or Sale of Securities 
Violations of Sections 17(a)(1) of the Securities Act 
(against All Defendants) 
127. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 
128. As alleged above, defendants Darrah and VFM knowingly or recklessly 
engaged in a scheme to defraud their clients, and engaged in acts, practices or courses 
of business that operated as a fraud upon their clients, by misappropriating the 
defrauded clients’ funds and transferring them into accounts controlled by defendant 
Darrah. 
129. By engaging in the conduct described above, defendants Darrah and 
VFM, and each of them, directly or indirectly, in the offer or sale of securities, and by 
the use of means or instruments of transportation or communication in interstate 
commerce or by use of the mails, directly or indirectly employed devices, schemes, or 
artifices to defraud, with scienter. 
130. By engaging in the conduct described above, defendants Darrah and 
VFM violated, and unless restrained and enjoined will continue to violate, Sections 
17(a)(1) of the Securities Act, 15 U.S.C. §§ 77q(a)(1). 
THIRD CLAIM FOR RELIEF 
Fraud by an Investment Adviser 
Violations of Sections 206(1) and 206(2) of the Advisers Act 
(against All Defendant) 
131. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 

 
 
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132. As alleged above, defendants Darrah and VFM were investment advisers 
and therefore owed a fiduciary duty to each of their clients.  Defendants Darrah and 
VFM each breached their fiduciary duty to their clients by misappropriating the 
defrauded clients’ funds and transferring them into accounts controlled by defendant 
Darrah.  
133. By engaging in the conduct described above, defendants Darrah and 
VFM, and each of them, directly or indirectly, by use of the mails or means and 
instrumentalities of interstate commerce: (a) employed or are employing devices, 
schemes or artifices to defraud clients or prospective clients; and (b) engaged in or 
are engaging in transactions, practices, or courses of business which operated as a 
fraud or deceit upon clients or prospective clients, with scienter and/or negligence. 
134. By engaging in the conduct described above, defendants Darrah and 
VFM have violated, and unless restrained and enjoined, is reasonably likely to 
continue to violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-
6(1) & 80b-6(2). 
FOURTH CLAIM FOR RELIEF 
Failure to Adopt and Implement Compliance Policies and Procedures 
Violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 
(against Defendant VFM) 
135. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 
136. As alleged above, at all relevant times, defendant VFM was an 
investment adviser registered under Section 203 of the Advisers Act [15 U.S.C. § 
80b-3].  By engaging in the conduct described above, defendant VFM, directly or 
indirectly, by use of the mails or means or instrumentalities of interstate commerce, 
engaged in acts, practices, or courses of business which were fraudulent, deceptive, or 
manipulative by providing investment advice to clients and failing to adopt and 
implement written policies and procedures reasonably designed to prevent violations, 

 
 
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by it or its supervised persons, of the Advisers Act and the rules that the SEC has 
adopted under the Advisers Act.  
137. By engaging in the conduct described above, Defendant VFM has 
violated, and unless restrained and enjoined will continue to violate, Section 206(4) 
of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-7 thereunder, 17 C.F.R. § 
275.206(4)-7. 
FIFTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of 
Section 206(4) of the Advisers Act and Rule 206(4)-7 
(against Defendant Darrah) 
138. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 
139. As alleged in paragraphs 135 through 137 above, by engaging in the 
conduct described above, defendant VFM has violated Section 206(4) of the Advisers 
Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-7 thereunder, 17 C.F.R. § 275.206(4)-7. 
140. By engaging in the conduct described above, defendant Darrah 
knowingly or recklessly provided substantial assistance to, and thereby aided and 
abetted VFM in its violations of Section 206(4) of the Advisers Act and Rule 206(4)-
7 thereunder, in violation of Section 209(f) of the Advisors Act, 15 U.S.C. § 80b-9(f).   
141. By engaging in the conduct described above, defendant Darrah aided and 
abetted, and unless restrained and enjoined will continue to aid and abet violations of 
Section 206(4) of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-7 
thereunder, 17 C.F.R. § 275.206(4)-7. 
SIXTH CLAIM FOR RELIEF 
False Statements in Reports Filed with the SEC 
Violations of Section 207 of the Advisers Act 
(against All Defendants) 
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122 above. 
143. As alleged above, defendants Darrah and VFM made untrue statements 
of material fact in VFM’s Forms ADV concerning its custody of client assets and 
clients receiving at least quarterly account statements direction from their custodians.  
At all relevant times, defendant Darrah and VFM acted willfully and recklessly in 
making the untrue statements of material fact. 
144. By engaging in the conduct described above, defendant Darrah and VFM 
willfully made untrue statements of a material fact in reports VFM filed with the SEC 
or willfully omitted to state in such reports material facts required to be stated therein.  
145. By engaging in the conduct described above, defendants Darrah and 
VFM violated, and unless restrained and enjoined will continue to violate, Section 
207 of the Advisers Act, 15 U.S.C. § 80b-7. 
SEVENTH CLAIM FOR RELIEF 
Fraud by an Investment Adviser (The Custody Rule) 
Section 206(4) of the Advisers Act and Rule 206(4)-2 Thereunder 
(against Defendant VFM) 
146. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 
147.  As alleged above, at all relevant times, defendant VFM was an 
investment adviser registered under Section 203 of the Advisers Act [15 U.S.C. § 
80b-3].  By engaging in the conduct described above, defendant VFM, directly or 
indirectly, by use of the mails or means or instrumentalities of interstate commerce, 
engaged in acts, practices, or courses of business which were fraudulent, deceptive, or 
manipulative by having custody of client funds or securities without (1) having a 
reasonable basis , after due inquiry, for believing that the qualified custodian sends 
account statements at least quarterly to the clients and (2) ensuring that client funds 
and securities are verified by actual examination each year by an independent public 
accountant at a time chosen by the accountant without prior notice or announcement 

 
 
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to the adviser.  
148. By reason of the foregoing, defendant VFM, directly or indirectly, 
violated and, unless restrained and enjoined, will continue to violate Section 206(4) 
of the Advisers Act [15 U.S.C. § 80b-6(4)] and Rule 206(4)-2 thereunder [17 C.F.R. 
§§ 275.206(4)-2].  
EIGHTH CLAIM FOR RELIEF 
Aiding and Abetting Fraud by an Investment Adviser (The Custody Rule) 
Section 206(4) of the Advisers Act and Rule 206(4)-2 Thereunder 
(against Defendant Darrah) 
149. The SEC realleges and incorporates by reference paragraphs 1 through 
122 above. 
150.  As alleged in paragraphs 146 through 148 above, by engaging in the 
conduct described above, defendant VFM has violated Section 206(4) of the Advisers 
Act [15 U.S.C. § 80b-6(4)] and Rule 206(4)-2 thereunder [17 C.F.R. §§ 275.206(4)-
2].  
151. By engaging in the conduct described above, defendant Darrah 
knowingly or recklessly provided substantial assistance to, and thereby aided and 
abetted VFM in its violations of Section 206(4) of the Advisers Act and Rule 206(4)-
2 thereunder, in violation of Section 209(f) of the Advisors Act, 15 U.S.C. § 80b-9(f).   
152. By engaging in the conduct described above, defendant Darrah aided and 
abetted, and unless restrained and enjoined will continue to aid and abet violations of 
Section 206(4) of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-2 
thereunder, 17 C.F.R. § 275.206(4)-2. 
PRAYER FOR RELIEF 
WHEREFORE, the SEC respectfully requests that the Court: 
I. 
Issue findings of fact and conclusions of law that Defendants committed the 
alleged violations. 

 
 
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II. 
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 
Civil Procedure, permanently enjoining defendants Darrah and VFM, and their 
officers, agents, servants, employees and attorneys, and those persons in active 
concert or participation with any of them, who receive actual notice of the judgment 
by personal service or otherwise, and each of them, from violating Section 17(a) of 
the Securities Act [15 U.S.C. §77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. 
§§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Sections 206(1) 
and 206(2) of the Advisers Act [15 U.S.C. §§ 80b-6(1) & 80b-6(2)]. 
III. 
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 
Civil Procedure, permanently enjoining defendant Darrah and VFM, and their agents, 
servants, employees and attorneys, and those persons in active concert or 
participation with any of them, who receive actual notice of the judgment by personal 
service or otherwise, and each of them, from violating Section 207 of the Advisers 
Act [15 U.S.C. § 80b-7]. 
IV. 
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 
Civil Procedure, permanently enjoining defendant VFM, and its agents, servants, 
employees and attorneys, and those persons in active concert or participation with 
any of them, who receive actual notice of the judgment by personal service or 
otherwise, and each of them, from violating Section 206(4) of the Advisers Act [15 
U.S.C. § 80b-6(4)], and Rules 206(4)-2 and 206(4)-7 thereunder, [17 C.F.R. §§ 
275.206(4)-2 & 275.206(4)-7]. 
V. 
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 
Civil Procedure, permanently enjoining defendant Darrah, and her agents, servants, 
employees and attorneys, and those persons in active concert or participation with 

 
 
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any of them, who receive actual notice of the judgment by personal service or 
otherwise, and each of them, from aiding and abetting any violation of Section 206(4) 
of the Advisers Act [15 U.S.C. § 80b-6(4)], and Rules 206(4)-2 and 206(4)-7 
thereunder, [17 C.F.R. §§ 275.206(4)-2 & 275.206(4)-7]. 
VI. 
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 
Civil Procedure, pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 
78u(d)(5)], permanently enjoining Defendant Darrah from directly or indirectly 
participating  in the offer, sale, or transfer of any security on behalf of any other 
person or any entity, including in her capacity as a trustee for such other person or 
entity; provided, however, that such injunction shall not prevent Defendant Darrah 
from purchasing or selling securities for her own personal account. 
VII. 
Order Defendants to disgorge all funds received from their illegal conduct, 
together with prejudgment interest thereon, pursuant to Sections 21(d)(3), 21(d)(5), 
and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(3), 78u(d)(5), and 78u(d)(7)]. 
VIII. 
Order Relief Defendant PC&J to disgorge any unjust enrichment received by 
PC&J from Defendants’ illegal conduct, together with prejudgment interest thereon, 
pursuant to Sections 21(d)(3), 21(d)(5), and 21(d)(7) of the Exchange Act [15 U.S.C. 
§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]. 
IX. 
Order Defendants to pay civil penalties under Section 20(d) of the Securities 
Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. § 
78u(d)(3)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. 
X. 
Retain jurisdiction of this action in accordance with the principles of equity and 
the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

 
 
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all orders and decrees that may be entered, or to entertain any suitable application or 
motion for additional relief within the jurisdiction of this Court. 
XI. 
Grant such other and further relief as this Court may determine to be just and 
necessary. 
Dated:  October 20, 2023  
 /s/ Douglas M. Miller 
DOUGLAS M. MILLER 
Attorney for Plaintiff 
Securities and Exchange Commission 
 
 
 

1 DOUGLAS M. :MILLER (Cal. Bar No. 240398)
Email: [email protected]

2 KELLY C. BOWERS (Cal. Bar No. 164007)
Email: [email protected]

3
Attorneys for Plaintiff

4 Securities and Exchange Commission
Katharine E. Zoladz, Associate Regional Director and

5 Acting Co-Regional Director
Gary Y. Leung, Associate Regional Director

6 444 S. Flower Street, Suite 900
J,9$ Agel$.,g@lip,mtg,99o71

7 Telephone: 323) 965-3998
Facsimile: (€ 13)443-1904

FILED
CLERK, U.S. DISTRICT COURT

I OCT20 2023

CENTRALDISTRICT OF CALIFORNIA

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SECURJTIES AND EXCHANGE
COMMISSION,

Plaintiff,

vs.

JULIE ANNE DARRAH and VIVID
FINANCIAL MANAGEMENT, INC.,

Defendants, and

PC&J JOINT VENTURES, LLC,

ReliefDefendant.

Case No.

COMPLAINT

(FILED UNDER SEAL)

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Western Division

2:23-CV-08843-CAS-AGR.x



 

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Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1) & 77v(a), Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 

Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a), and Sections 209(d), 209(e)(1) and 214 of the 

Investment Advisers Act of 1940 (“Advisers Act”), 15 U.S.C. §§ 80b-9(d), 80b-

9(e)(1) & 90b-14. 

2. Defendants have, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act, 15 U.S.C. § 77v(a), Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), and 

Section 214(a) of the Advisers Act, 15 U.S.C. § 80b-14, because certain of the 

transactions, acts, practices and courses of conduct constituting violations of the 

federal securities laws occurred within this district.  In addition, venue is proper in 

this district because defendant Julie Anne Darrah (“Darrah”) resides in this district, 

and because defendant Vivid Financial Management, Inc. (“VFM”) and relief 

defendant PC&J Joint Ventures, LLC (“PC&J”) have their principal places of 

business in this district. 

SUMMARY 

4. This emergency action concerns Darrah’s scheme to misappropriate 

millions of dollars from the bank and brokerage accounts of her clients and spend 

those funds on herself and on relief defendant PC&J, an ailing restaurant company 

that Darrah co-owns.  In doing so, Darrah abused her position as an investment 

adviser to the clients that she stole from, and violated the fiduciary duties she owed 



 

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those advisory clients.  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.     

5. The scheme began in at least November 2016, if not earlier, while 

Darrah was still working for VFM, which was at the time an SEC-registered 

investment adviser partially owned by Darrah and where she served as its president 

and chief compliance officer.  Darrah primarily targeted elderly female advisory 

clients for the scheme, many of whom had come to rely on Darrah for their financial 

well-being (“the defrauded clients”).  Indeed, in addition to giving Darrah 

discretionary authority over their brokerage accounts, many of the defrauded clients 

appointed Darrah to serve as a trustee over the trusts they had established for 

themselves, while others gave Darrah power of attorney to handle their financial 

affairs.   

6. Instead of honoring the fiduciary duty that she owed as an investment 

adviser to act in the best interest of the defrauded clients, Darrah began stealing from 

them by funneling money out of the defrauded clients’ brokerage and bank accounts 

and taking those funds for herself and relief defendant PC&J.   

7. In total, between November 2016 and July 2023, Darah misappropriated 

approximately $2.25 million in funds from the accounts of nine defrauded clients 

who hired VFM and Darrah as their investment adviser. 

8. The fact that Darrah had custody of the defrauded clients’ assets also led 

VFM to violate what is known as the Custody Rule.  Under that rule, an investment 

adviser cannot have custody of client funds or securities unless the adviser, among 

other things:  (1) provides clients with notice of any custodial accounts opened on 

clients’ behalf, (2) has a reasonable basis for believing that clients will get at least 

quarterly statements from those qualified custodians and (3) ensures that client 

accounts are subject to annual surprise examinations to verify that client funds and 

securities are in the accounts.  Darrah aided and abetted VFM in its violation of the 



 

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Custody Rule by carrying out the scheme in the manner that she did. 

9. VFM, the registered investment adviser where Darrah worked when the 

scheme began, failed to implement the policies and procedures designed to prevent 

Darrah from carrying out this scheme.  As the president and chief compliance officer 

of VFM, Darrah aided and abetted VFM in these compliance failures.  For example, 

VFM’s compliance manual claimed that it would “take measures” to avoid VFM 

personnel like Darrah from serving as a trustee for client accounts and claimed that it 

would take measures to ensure that clients received their quarterly account statements 

from the custodians of their funds.  Had these policies been enforced, Darrah’s fraud 

may well have been detected earlier, or even prevented.  VFM clearly failed to 

implement these policies and procedures because for several years Darrah was able to 

do both things that VFM claimed it would take measures to “avoid,” and she was able 

to do it with respect to multiple clients.   

10. Similarly, the Forms ADV and Client Brochures that Darrah submitted 

to the SEC on behalf of VFM during the scheme contained false and misleading 

statements regarding VFM’s custody of its clients’ assets.  For instance, VFM’s 

Client Brochures claimed that its personnel would not have custody of their clients’ 

funds or their securities, and that VFM would make sure that clients “receive at least 

quarterly account statements directly from their custodians.”  These statements in 

VFM’s SEC filings were materially false and misleading because Darrah did, in fact, 

have custody of more than $2 million of the defrauded clients’ assets and was able to 

take steps to prevent them from getting the quarterly statements from the custodians 

that would have showed this.   

11. By engaging in this conduct, Darrah and VFM violated Section 17(a)(1) 

of the Securities Act, Section 10(b) of the Exchange Act and Rules 10b-5(a) and (c) 

thereunder, and Sections 207 and 206(1) and (2) of the Advisers Act; VFM violated 

Section 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-7 thereunder; and 

Darrah, pursuant to Section 209(f) of the Advisers Act, aided and abetted VFM’s 



 

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violation of Section 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-7 

thereunder. 

12. To prevent future violations of these federal securities laws, to disgorge 

all ill-gotten gains for the benefit of the defrauded clients, including any unjust 

enrichment that relief defendant PC&J received from the scheme, and to punish 

violations of the securities laws, the SEC seeks permanent injunctions, disgorgement 

with prejudgment interest, and civil penalties.   

13. To halt Darrah’s dissipation of assets commingled with funds belonging 

to the defrauded clients and possibly others, the SEC further seeks, as detailed in its 

Ex Parte Application for a Temporary Restraining Order and Order to Show Cause, 

the immediate entry of the following: 

(a) A Temporary Restraining Order (“TRO”), which shall remain in 

force until the Court’s resolution of the SEC’s application to convert the TRO to a 

preliminary injunction: 

i. temporarily restraining Darrah from violating Section 17(a) 

of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5, and 

Sections 206(1) and 206(2) of the Advisers Act; and 

ii. temporarily restraining Darrah from directly or indirectly 

participating in the offer, sale, or transfer of any security on behalf of any other 

person or any entity, including in her capacity as a trustee for such other person or 

entity; provided, however that such injunction shall not prevent Darrah from 

purchasing or selling securities for her own personal accounts.  

(b) An order requiring Darrah to provide sworn accounting. 

(c) An order prohibiting Darrah from destroying, mutilating, 

concealing, disposing of or altering documents.  

(d) An order allowing expediting discovery. 

(e) An order freezing: (i) the assets of Darrah; (ii) the assets held for 

Darrah’s direct or indirect benefit; and (iii) the assets subject to Darrah’s direct or 



 

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indirect control.  

THE DEFENDANTS 

14. Defendant Julie Anne Darrah, age 50, a resident of Santa Maria, 

California, was VFM’s president, chief compliance officer, and an approximately 

one-third shareholder of VFM from 2015 through 2021.  In January 2022, Darrah and 

the other owners of VFM sold VFM’s investment advisory business to another SEC-

registered investment adviser based in Minnesota (“Minnesota Investment Adviser”).  

Darrah was associated with Minnesota Investment Adviser as a senior vice president 

from January 2022 until July 25, 2023, when Minnesota Investment Adviser placed 

her on administrative leave.  Following an internal investigation into her conduct 

alleged in this complaint, Minnesota Investment Adviser terminated Darrah on 

September 15, 2023. 

15. Defendant Vivid Financial Management, Inc. is a California corporation 

with its principal place of business in Santa Maria, California.  VFM was an SEC-

registered investment adviser from 2015 to January 2022, when it sold its advisory 

business to Minnesota Investment Adviser and terminated its registration with the 

SEC.  VFM remains a corporation in good standing with the State of California.   

THE RELIEF DEFENDANT 

16.    Relief defendant PC&J is a California limited liability company with 

its principal place of business in Orcutt, California.  PC&J operates two restaurants in 

Santa Maria and Orcutt, California.  Darrah is an officer, 33.4% owner, and registered 

agent of PC&J.   

RELEVANT ENTITY 

17.   Minnesota Investment Adviser is a Minnesota limited liability company 

with its principal place of business in Plymouth, Minnesota.  Minnesota Investment 

Adviser is dually registered with the SEC as an investment adviser and a broker-

dealer.    



 

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THE ALLEGATIONS 

A. Darrah’s Advisory Business at VFM and Minnesota Investment Adviser 

18. From 2015 to January 2022, when Darrah and the other VFM owners 

sold VFM’s advisory business to Minnesota Investment Adviser, VFM provided 

investment advisory services to its clients.  During that time period, VFM was an 

investment adviser within the meaning of Section 202(a)(11) of the Advisers Act, 15 

U.S.C. § 80b-2(a)(11), because VFM was engaged in the business of providing, for 

compensation, investment advice as to the value of securities and as to the 

advisability of investing in, purchasing, and selling securities. 

19. From 2015 to January 2022, Darrah was VFM’s president and an owner 

of the firm.  She provided investment advisory services to VFM clients who 

compensated Darrah for that investment advice through VFM.  During that time 

period, Darrah was an investment adviser within the meaning of Section 202(a)(11) 

of the Advisers Act, 15 U.S.C. § 80b-2(a)(11), because she was engaged in the 

business of providing, for compensation, investment advice as to the value of 

securities and as to the advisability of investing in, purchasing, and selling securities.  

20. After the sale of VFM’s advisory business to Minnesota Investment 

Adviser in January 2022, Darrah was associated with Minnesota Investment Adviser 

firm as a senior vice president.  She continued to provide investment advisory 

services to clients in exchange for compensation until July 25, 2023, when Minnesota 

Investment Adviser placed Darrah on administrative leave.  During that time period, 

Darrah remained an investment adviser within the meaning of Section 202(a)(11) of 

the Advisers Act, 15 U.S.C. § 80b-2(a)(11), because she was engaged in the business 

of providing, for compensation, investment advice as to the value of securities and as 

to the advisability of investing in, purchasing, and selling securities. 

21. As investment advisers, Darrah and VFM were fiduciaries for their 

advisory clients.  As such, they owed their clients both a duty of care and a duty of 

loyalty.  Those fiduciary duties obligated Darrah and VFM to serve, at all times, the 



 

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best interests of their clients and not subordinate those clients’ interests to their own.  

By engaging in a scheme to misappropriate advisory client assets for her personal 

use, Darrah and VFM breached the duty of utmost good faith they owed to their 

advisory clients, and violated the antifraud provisions of the federal securities laws. 

B. Darrah’s Misappropriation of Client Money 

22. From 2016 to July 2023 (the “relevant period”), Darrah misappropriated 

approximately $2.25 million from nine (9) of her advisory clients (collectively, 

“defrauded clients”).  Across these nine instances, Darrah gained control of defrauded 

client assets, often liquidated defrauded clients’ securities, and then took their money 

for herself, or for the benefit of relief defendant PC&J, a restaurant operator that she 

was an owner of.     

23. As detailed below, Darrah controlled defrauded client assets in several 

different ways:  (1) she was the trustee of their trusts; (2) defrauded clients’ brokerage 

accounts had standing letters of authorization (“SLOA”) authorizing Darrah, as their 

investment adviser, to transfer funds from those brokerage accounts to defrauded 

clients’ bank accounts; (3) Darrah was a signatory on defrauded clients’ bank 

accounts; and/or (4) Darrah had power of attorney over defrauded clients’ property, 

including all of their bank and brokerage accounts. 

1. Defrauded Client S.S. 

24. On or about October 6, 2015, S.S. hired VFM and Darrah to manage her 

personal brokerage accounts and her trust’s brokerage accounts as her investment 

adviser.  At the time, S.S. was a 75-year-old widow.  In January 2022, when 

Minnesota Investment Adviser acquired VFM's business and Darrah joined 

Minnesota Investment Adviser, S.S. became an advisory client of Minnesota 

Investment Adviser.      

a. Darrah’s control of S.S.’s assets 

25. As the investment adviser for S.S. and S.S.’s trust, Darrah had 

discretionary authority to buy and sell securities in S.S.’s brokerage accounts. 



 

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26. In addition, a SLOA authorized Darrah to transfer funds from S.S.’s 

brokerage accounts to S.S.’s bank accounts. 

27. In April 2017, S.S. appointed Darrah as the trustee of her trust.  As its 

trustee, Darrah had the power to manage and invest all of the trust’s property, 

including S.S.’s bank accounts and brokerage accounts.   

28. Beginning in October 2017, all of S.S.’s bank account statements were 

addressed to Darrah’s home. 

29. Beginning in November 2017, all of S.S.’s brokerage account statements 

were addressed to another house owned by Darrah. 

30. In March 2021, Darrah opened a new bank account in the name of S.S.’s 

trust.  Darrah was the only signatory for this new bank account, and she had the 

account’s statements addressed to her home. 

b. Darrah’s misappropriation of S.S.’s assets 

31. Darrah used her control of S.S.’s assets to misappropriate $1,057,800 

from S.S. 

32. In the relevant period, Darrah sold nearly all of the securities held in 

S.S.’s brokerage accounts.  Next, Darrah used a SLOA to transfer the proceeds from 

the sale of these securities from S.S.’s brokerage accounts to S.S.’s bank accounts.  

Because Darrah also controlled S.S.’s bank accounts, she was then able to take funds 

out of S.S.’s bank accounts for Darrah’s own benefit.   

33. In all, Darrah transferred $631,975 to herself, $190,000 to relief 

defendant PC&J, $200,000 to a third-party to buy a business then held in Darrah’s 

own name, $3,500 to another advisory client of Darrah’s, and $2,240 to VFM.  In 

addition, from mid-May 2023 to mid-July 2023, Darrah used $30,085 from S.S.’s 

bank accounts to pay for personal charges Darrah had made on S.S.’s credit card.   

34. In the relevant period, VFM still charged and collected $19,093 in 

advisory fees from S.S.’s for Darrah’s investment management services. 



 

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c. S.S.’s current financial condition      

35. As of July 31, 2023, S.S.’s bank and brokerage accounts had a total 

balance of $87,032.  Besides her investments, S.S.’s only source of regular income is 

her social security payment of $1,631 per month.  S.S. has been living in a memory 

care facility since April 2022, where her monthly expenses are $7,845 per month.   

2. Defrauded Client M.S. 

36. M.S. is the older sister of S.S.   

37. In May 2015, M.S., then a 78-year-old widow, hired VFM and Darrah to 

manage her personal and her trust’s brokerage accounts as her investment adviser.  In 

January 2022, when Minnesota Investment Adviser acquired VFM's business and 

Darrah joined Minnesota Investment Adviser, M.S. became an advisory client of 

Minnesota Investment Adviser.   

a. Darrah’s control of M.S.’s assets 

38. As M.S.’s investment adviser, Darrah had discretionary authority to buy 

and sell securities in M.S.’s brokerage accounts. 

39. In addition, a SLOA authorized Darrah to transfer funds from M.S.’s 

brokerage accounts to M.S.’s bank accounts.   

40. In 2016, Darrah became a signatory to M.S.’s checking accounts. 

41. In 2019, Darrah became a signatory to M.S.’s savings accounts. 

42. In March 2020, Darrah became a successor trustee of M.S.’s trust.   

b. Darrah’s misappropriation of M.S.’s assets 

43. Darrah used her control of M.S.’s assets to misappropriate $578,400 

from M.S. 

44. In the relevant period, Darrah sold nearly all of the securities held in 

M.S.’s brokerage accounts.  Next, Darrah used a SLOA to transfer the proceeds from 

the sale of these securities from M.S.’s brokerage accounts to M.S.’s bank accounts.  

Because Darrah also controlled M.S.’s bank accounts, she was then able to take funds 

out of M.S.’s bank accounts for Darrah’s own benefit.   



 

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45. In all, Darrah transferred $ 515,400 to herself, and $63,000 to relief 

defendant PC&J.   

c. M.S.’s current financial condition 

46. As of July 31, 2023, M.S.’s bank and brokerage accounts had a total 

balance of $24,605.  Besides her investments, M.S.’s only source of regular income is 

her social security payment of $2,027 per month.   

3. Defrauded Client C.H. 

47. In March 2022, C.H. hired Darrah and Minnesota Investment Adviser as 

her investment adviser.  C.H. was an 82-year-old widow at that time. 

a. Darrah’s control of C.H.’s assets 

48. When she hired Darrah as her investment adviser, C.H. also executed a 

power of attorney that appointed Darrah as her agent, and vested in Darrah the power 

to dispose of, sell, and convey C.H.’s real and personal property, including assets 

held in all of C.H.’s bank and brokerage accounts. 

49. In addition, a SLOA authorized Darrah to transfer funds from C.H.’s 

brokerage accounts to C.H.’s bank account. 

50. Then, in late May 2023, Darrah became a co-owner of and signatory for 

C.H.’s bank account.     

b. Darrah’s misappropriation of C.H.’s assets 

51. Darrah used her control of C.H.’s assets to misappropriate $242,000 

from C.H. 

52. From late May 2023 to July 20, 2023, Darrah sold $210,000 of securities 

held in C.H.’s brokerage accounts.  She then used a SLOA to transfer $177,800 of 

those sales proceeds to C.H.’s bank account, which Darrah had become a signatory to 

and co-owner of as of late May 2023.  With her control of that bank account, Darrah 

took C.H.’s funds for her own benefit. 

53. In all, Darrah transferred $236,500 to herself, and another $5,500 to 

another bank account co-owned by Darrah.   



 

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4. Defrauded Clients C.H. and C.L. 

54. In May 2015, S.A., then 72 years old, hired VFM and Darrah to manage 

her personal brokerage accounts and her trust’s brokerage accounts as her investment 

adviser.   

a. Darrah’s control of S.A.’s assets 

55. As S.A.’s investment adviser, Darrah had discretionary authority to buy 

and sell securities in S.A.’s brokerage accounts. 

56. In September 2019, S.A. appointed Darrah as the trustee of her trust.  As 

its trustee, Darrah had the power to manage and invest all of the trust’s property, 

including S.A.’s bank accounts and brokerage accounts.  S.A.’s daughters, C.H. and 

C.L., were the trust’s beneficiaries.   

57. S.A. died less than a year later, in April 2020.  S.A.’s daughters, C.H. 

and C.L., became VFM and Darrah advisory clients in May 2020. 

58. In July 2020, Darrah opened, in the name of S.A.’s trust that she 

controlled, a bank account that Darrah also controlled.  Darrah then consolidated 

S.A.’s assets – including funds from S.A.’s bank and brokerage accounts and from 

the sale of her home – in that bank account. 

b. Darrah’s misappropriation of C.H.’s and C.L.’s assets 

59. Darrah used her control of S.A.’s assets to misappropriate $5,793 from 

S.A.’s daughters, C.H. and C.L., who were the beneficiaries of S.A.’s trust.   

60. With all of S.A.’s assets consolidated into a bank account in the name of 

S.A.’s trust, which Darrah controlled as trustee, Darrah transferred $7,900 from the 

account to herself, and the remainder to S.A.’s daughters.   

61. Darrah provided no financial reporting concerning the trust to S.A.’s 

daughters, and they did not know that Darrah had kept $7,900 of S.A.’s assets for 

herself.   

62. Because Darrah separately transferred a total of $2,107 to S.A.’s 

daughters, C.H. and C.L., from her personal account, Darrah took a net of $5,793 



 

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from S.A.’s daughters. 

5. Defrauded Client B.C. 

63. At the start of 2020, B.C., then a 79-year-old retired teacher, was also an 

advisory client of VFM and Darrah.  In January 2022, when Minnesota Investment 

Adviser acquired VFM’s business and Darrah joined Minnesota Investment Adviser, 

B.C. became an advisory client of Minnesota Investment Adviser.      

a. Darrah’s control of B.C.’s assets 

64. In September 2020, B.C. executed a power of attorney that appointed 

Darrah as her agent, and vested in Darrah the power to dispose of, sell, and convey 

B.C.’s real and personal property, including assets held in all of B.C.’s bank and 

brokerage accounts. 

b. Darrah’s misappropriation of B.C.’s assets and her efforts to 

conceal that fraud 

65. In August 2021, Darrah asked B.C. to sign a $150,000 check for a 

restaurant Darrah was opening, and B.C. did.   

66. In June 2023, Darrah asked B.C. to sign a check for $50,000 so that 

Darrah could buy a house, and B.C. did. 

67. The $200,000 transferred to Darrah was funded in significant part by 

Darrah’s sale of securities held in B.C.’s brokerage accounts. 

68. Later in September 2023, Darrah went to B.C.’s home and had her initial 

two promissory notes, both backdated: (1) a $150,000 promissory note backdated to 

August 3, 2021; and (2) a $50,000 promissory note backdated to July 15, 2023.   

69. The purported notes stated that Darrah would repay the $150,000 and 

$50,000 in ten years on December 31, 2033, when B.C. would be in her nineties, 

along with interest of 2% per annum.   

70. The backdated promissory notes that Darrah had B.C. initial in 

September 2023 also stated that, “This note is intended as a term of endearment from 

[B.C.] to Julie Darrah.  We agree we have been like sisters for over 20 years.  We feel 



 

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as though we are family and this agreement is between family members.”   

6. Defrauded Client B.H.  

71. In November 2021, B.H., then 75 years old, hired Darrah and VFM as 

her investment adviser.  In January 2022, when Minnesota Investment Adviser 

acquired VFM’s business and Darrah joined Minnesota Investment Adviser, B.H. 

became an advisory client of Minnesota Investment Adviser. 

a. Darrah’s control of B.H.’s assets 

72. A month after hiring Darrah as her investment adviser, B.H. created a 

special needs trust for herself, and appointed Darrah the trustee of that trust in 

December 2021.   

73. B.H.’s trust provided that Darrah, as trustee, was to use trust assets “for 

the satisfaction of [B.H.’s] special needs,” which meant “maintaining [B.H.’s] good 

health, safety, education and welfare.”   

74. As its trustee, Darrah had the power to manage and invest all of the 

trust’s property, including B.H.’s bank accounts and brokerage accounts.    

b. Darrah’s misappropriation of B.H.’s assets  

75. Darrah used her control of B.H.’s assets to misappropriate $96,200 from 

B.H. 

76. In 2022, B.H. received an inheritance.  Darrah opened a bank account in 

the trust’s name that Darrah solely controlled.  In January 2022, Darrah deposited the 

$141,618 that B.H. had inherited into that bank account, and then told B.H. that she 

would provide B.H. with money as needed.   

77. However, from February 2022 to mid-June 2023, Darrah took $128,250 

from the trust’s bank account.  Taking into account one payment and a purchase of an 

automobile for B.H. from these funds, Darrah kept $96,200 of B.H.’s assets for 

herself.   

c. B.H.’s current financial condition 

78. As of mid-June 2023, B.H.’s trust bank account had a balance of $1,012.  



 

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The account would have had a negative balance but for Darrah’s deposit of $3,500 

that she took from S.S.  

7. Defrauded Client D.C. 

79. In August 2020, L.C. was an advisory client of Darrah and VFM.  At the 

time, L.C. was a widowed 85-year-old retired elementary school teacher.   

a. Darrah’s control of L.C.’s assets 

80. That month, L.C. appointed Darrah as trustee of her trust.  As its trustee, 

Darrah had the power to manage and invest all of the trust’s property, including 

L.C.’s bank accounts and brokerage accounts.   

81. In addition, as L.C.’s investment adviser, Darrah had discretionary 

authority to buy and sell securities in L.C.’s brokerage accounts. 

82. In October 2020, L.C. died.  The trust’s beneficiary was L.C.’s son, 

D.C., who himself became an advisory client of VFM and Darrah.  In January 2022, 

when Minnesota Investment Adviser acquired VFM’s business and Darrah joined 

Minnesota Investment Adviser, D.C. became an advisory client of Minnesota 

Investment Adviser. 

83. In November 2020, Darrah opened a bank account in the L.C. trust’s 

name that she controlled.   

b. Darrah’s misappropriation of D.C.’s assets 

84. Darrah used her control of D.C.’s assets to misappropriate $27,937 from 

D.C., the beneficiary of L.C.’s trust. 

85. In November 2020, through her authority as trustee, Darrah transferred 

$20,000 from L.C.’s brokerage account to the trust bank account that Darrah had 

opened and also controlled. 

86. Separately, in October 2021 and February 2022, Darrah deposited 

another $8,170 into that trust bank account using L.C.’s tax refund and a payment 

from the California teacher’s retirement system.   

87. Rather than giving the money in the L.C. trust bank account to D.C., 



 

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Darrah took $27,937 of those funds for herself by transferring it to her bank accounts.   

88. After repeatedly requesting an accounting of L.C.’s estate, which Darrah 

failed to provide, D.C. terminated Darrah as his investment adviser in 2022.   

8. Defrauded Client P.S. 

89. In March 2019, J.S. was an advisory client of Darrah and VFM.  In 

January 2022, when Minnesota Investment Adviser acquired VFM’s business and 

Darrah joined Minnesota Investment Adviser, J.S. became an advisory client of 

Minnesota Investment Adviser   

90. In March 2019, J.S. created a special needs trust for his brother, P.S., 

and funded the trust with $54,125, his brother’s inheritance from their father’s estate. 

a. Darrah’s control of the special needs trust 

91. J.S. appointed Darrah as trustee for the special needs trust he created for 

his brother P.S. because he wanted a third-party to oversee his brother’s use of his 

inheritance.  As its trustee, Darrah had the power to manage and invest all of the 

trust’s property, including its bank accounts.    

92. In July 2020, Darrah opened a bank account in the name of the special 

needs trust, and deposited $54,125, the inheritance of J.S.’s brother into the account.  

Darrah had sole control over that account.  

b. Darrah’s misappropriation of trust assets 

93. Darrah used her control of special needs trust bank account to 

misappropriate $39,200 from J.S.’s brother, the beneficiary of that special needs trust. 

94. From July 2020 to May 2023, Darrah took $54,100 from the trust’s bank 

03.ccount.  Taking into account payments she later made to J.S.’s brother totaling 

$14,900, Darrah kept $39,200 in trust assets for herself. 

C. Darrah’s Use of Misappropriated Client Funds 

95. In total, between November 2016 and July 2023, Darah misappropriated 

approximately $2.25 million in funds from defrauded clients S.S., M.S., C.H., S.A.’s 

daughters, B.C., B.H., D.C. and J.S.’s brother.   



 

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96. Darrah transferred most of this misappropriated money into her personal 

bank accounts, where she commingled stolen defrauded client funds with funds 

relating to Darrah’s other business ventures.  She then used those commingled funds 

to buy and improve properties, pay her personal expenses, buy luxury vehicles, and 

buy and operate food-related businesses at a loss.    

D. Darrah’s Scienter and Negligence 

97. Over the course of years, Darrah repeatedly took money from her 

advisory clients, thus demonstrating her scienter and her negligent conduct.   

98. In addition, Darrah took several steps to conceal the scheme.  These 

steps demonstrate that VFM and Darrah, whose conduct is imputed to VFM, both 

acted with scienter in carrying out the scheme and in violating their fiduciary duties 

to the defrauded clients.  They further show that VFM and Darrah failed to exercise 

the standard of care reasonably expected of investment advisers in carrying out their 

fiduciary duties, including the duty of loyalty and duty of care.   

99. Some of the steps Darrah took that show her scienter and negligence are 

as follows: 

(a) In November 2021, Darrah entered into an agreement on behalf of 

VFM to sell all VFM’s wealth management assets to Minnesota Investment Adviser.  

As part of the asset purchase agreement, Minnesota Investment Adviser agreed to 

hire Darrah as a senior vice president, but she was required to provide Minnesota 

Investment Adviser with certain information as part of the asset purchase agreement 

and her ongoing employment with Minnesota Investment Adviser.  On or about 

November 4, 2021, before the asset purchase agreement closed, a representative for 

Minnesota Investment Adviser asked Darrah whether she served as a trustee for any 

of her VFM advisory clients and, if so, whether she was the trustee on those accounts 

or a successor trustee.  The Minnesota Investment Adviser representative made it 

clear to Darrah that she was being asked these questions as part of its compliance 

obligations.  In fact, this Minnesota Investment Adviser representative was the third 



 

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person to ask Darrah this question in connection with the asset purchase agreement.  

On or about November 4, 2021, Darrah sent a response to the Minnesota Investment 

Adviser representative falsely stating that she was “only a successor trustee” and “not 

currently acting as trustee on any of our clients” accounts.  Darrah’s false statement 

was designed to conceal her scheme to misappropriate the victim client’s money, 

many of whom had appointed Darrah as a trustee.   

(b) On or about November 11, 2021, Darrah provided Minnesota 

Investment Adviser representatives with a list of VFM clients for whom she was 

supposedly serving as a “successor trustee,” but the list did not M.S. or B.C., who had 

each appointed Darrah as the successor trustee of their trusts.  The successor trustee 

list Darrah submitted to Minnesota Investment Adviser therefore concealed her broad 

scheme to misappropriate victim clients’ money upon obtaining control over their 

assets.   

(c) On or about February 6, 2023, as part of her employment 

obligations with Minnesota Investment Adviser, a representative of Minnesota 

Investment Adviser asked Darrah to reaffirm that she was still only acting as a 

successor trustee for the individuals she had listed previously and that she was “not 

acting as trustee currently for any clients.”  Once again, Darrah falsely stated, “Yes 

this is accurate.” Darrah’s statement was materially false and misleadingly and 

designed to conceal her scheme to misappropriate the defrauded client’s money.   

(d) On or about February 21, 2023, Minnesota Investment Adviser 

asked Darrah to confirm that she had not borrowed money or securities from any 

advisory clients and had not loaned any money or securities to any advisory clients.  

Darrah affirmed to Minnesota Investment Adviser that same day she had not done 

either of these things.  However, beginning on or about July 17, 2023, and continuing 

through on or about September 26, 2023, the SEC issued several subpoenas to Darrah 

for documents relating to her advisory clients, including S.S. and M.S.  Two of the 

documents Darrah produced to the SEC in response to these subpoenas were 



 

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purported promissory notes in which S.S. and M.S. supposedly agreed to loan Darrah, 

their investment adviser, $200,000 and $100,000, respectively, at a two percent 

annual interest rate.  Even if the promissory notes she produced to the SEC are 

authentic, Darrah’s representation to Minnesota Investment Adviser that she had not 

borrowed any money from her advisory clients was therefore false and designed to 

conceal Darrah’s scheme.  In any case, those purported promissory notes did not 

explain the additional $857,800 Darrah misappropriated from S.S., or the additional 

$478,400 Darrah misappropriated from M.S.  

E. VFM Violated the Custody Rule 

100. Rule 206(4)-2 under the Advisers Act provides that it is “a fraudulent, 

deceptive, or manipulative act, practice or course of business” for a registered adviser 

like VFM to have custody of client funds or securities unless the adviser complies 

with certain specified requirements intended to protect client assets from being lost, 

misused, misappropriated (the “Custody Rule”).  

101. The Custody Rule provides that an adviser has custody of client assets if 

it holds, directly or indirectly, client funds or securities, or if it has the authority to 

obtain possession of those assets, including the capacity that gives the adviser legal 

ownership of, or access to, client funds or securities and any arrangement (including a 

general power of attorney or acting as a trustee) under which the investment adviser 

is authorized or permitted to withdraw client funds or securities maintained with a 

custodian upon instruction to the custodian.  

102. An adviser that has custody of client funds or securities must, among 

other things: (1) provide clients with notice of any custodial accounts opened on their 

behalf, (2) have a reasonable basis for believing that clients will get at least quarterly 

statements from those qualified custodians, and (3) have an independent public 

accountant conduct an annual surprise examination to verify clients’ funds and 

securities.   

103. At all relevant times, VFM had custody of the defrauded clients’ assets 



 

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due to Darrah (a) being appointed a trustee of the defrauded clients’ trust accounts, 

(b) becoming a signatory on the defrauded clients’ bank accounts and (c) being 

granted power of attorney over the defrauded clients’ assets.  Additionally, VFM had 

custody of the defrauded clients’ assets due to the “Move Money Advisor 

Authorization Form” (sometimes referred to as a standing letter of authorization or 

instruction “SLOA”) the defrauded clients submitted to the broker-dealer for their 

trading accounts, authorizing VFM to move money out of their brokerage accounts 

and into bank accounts over which Darrah had been designated trustee, granted 

power of attorney or for which she had become a signatory on the account. 

104. Despite having custody of the defrauded clients’ assets, VFM 

negligently failed to comply with the Custody Rule.  First, VFM did not inform 

clients in writing of the bank accounts opened and controlled by Darrah.  Second, 

VFM did not have a reasonable basis to believe the custodians of the defrauded 

clients’ assets were sending account statements at least quarterly to the defrauded 

clients.  That is because Darrah had either changed the mailing address on the 

account statements to her residence or a residence she owned and controlled or had 

opened the account using her residence or a residence she owned and controlled.  

Third, VFM did not verify the defrauded clients’ funds and securities through an 

annual surprise examination. 

105. As VFM’s president and part-owner, Darrah aided and abetted VFM in 

its violation of the Custody Rule by gaining custody of the defrauded clients’ assets 

and having the account statements from the custodians of those assets sent to her 

residence or a residence she owned and controlled instead.  Darrah further aided and 

abetted VFM in its violation of the Custody Rule by not engaging any public 

accountant to conduct annual surprise examinations of either the brokerage or bank 

account assets over which VFM had custody.    

F. Darrah and VFM Filed False and Misleading Forms ADV 

106. Section 207 of the Advisers Act prohibits any person from willfully 



 

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making “any untrue statement of a material fact in any registration application or 

report filed with the Commission under Section 203 or 204, or willfully to omit to 

state in any such application or report any material fact which is required to be stated 

therein.” 

107. Between in or about March 2017, and in or about December 2021, 

Darrah, as the chief compliance officer of VFM, signed and/or filed approximately 

twenty-two (22) separate Forms ADV amendments and Firm Brochures with the SEC 

on behalf of VFM that contained materially false and misleading statements.  Darrah, 

whose conduct and mental state are imputed to VFM, knew, or acted recklessly by 

not knowing, that the statements she submitted to the SEC on behalf of VFM were 

materially false and misleading at or around the time she submitted them.   

108. The Form ADV amendments that Darrah signed and filed falsely stated 

that in connection with advisory services provided to clients, no VFM related person 

had custody of any advisory clients’ cash, bank accounts, or securities. 

109. These statements were false because Darrah, a related person of VFM, in 

connection with providing advisory services to clients had custody of advisory 

clients’ cash, bank accounts, and securities.     

110. The Firm Brochures Darrah filed from March 2017 to March 2019 stated 

that VFM did not have custody of client assets, its clients received at least quarterly 

account statements directly from their custodians listing the client’s account balance, 

transaction history, and fees, and that it promptly notified clients in writing of the 

contact information for the client’s qualified custodians.   

111. These statements were false because VFM through Darrah did have 

custody of some clients’ assets, not all of its clients received account statements 

directly from the custodians as Darrah had account statements for some clients 

addressed to her home or a home she owned, and VFM did not notify clients in 

writing of the contact information for the bank accounts that Darrah opened for 

certain clients.   



 

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112. The Firm Brochures filed from April 2019 to March 2021 stated that 

VFM was deemed to have custody of certain client assets because SLOAs from 

clients gave it authority to disburse money from the client accounts to third parties.  

The Firm Brochures further stated that VFM had adopted certain safeguards to 

protect the clients’ money, including that VFM maintained records showing the 

accounts that received money from clients’ brokerage account pursuant SLOAs were 

not a related party of the investment adviser.   

113. These statements were false and misleading.  The statements were 

misleading because the Firm Brochures failed to disclose all the other ways by which 

VFM and Darrah had custody of certain client assets.  The statements were false 

because the bank accounts that received money from client brokerage accounts were 

related parties of VFM as Darrah had authority over the bank accounts.   

114. Darrah knew, or acted recklessly by not knowing, that the statements 

were materially false and misleading because, as detailed above, she knowingly took 

custody of the defrauded clients’ assets by, in part, becoming a trustee for her 

advisory clients’ accounts and a signatory on her advisory clients’ bank accounts, and 

she had the account statements of the custodians sent to herself instead of her 

advisory clients.   

G. VFM Failed to Implement Its Policies and Procedures 

115. Section 206 of the Advisers Act and Rule 206(4)-7 require registered 

investment advisers like VFM to adopt and implement policies and procedures 

designed to prevent violations of the Advisers Act and its Rules. 

116. VFM negligently failed to adopt and implement policies and procedures 

reasonably designed to prevent VFM or its employees, like Darrah, from using 

advisory client money to benefit themselves.  VFM merely had a policy that, “[a]s a 

fiduciary under the Adviser’s Act [sic], VFM recognize[d],” among other things that: 

“[i]t has an affirmative duty of utmost good faith to act solely in the best interests of 

the Client”; and “[t]he duty to render disinterested and impartial advice.”  VFM, 



 

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however, had no procedures in place for implementing those general policies, as 

evidenced by the fact that Darrah misappropriated money from advisory clients for 

her benefit while a representative of VFM.   

117. Further, VFM failed to implement the policies that it did have 

concerning custody of client assets and fulfilling the fiduciary duty that Darrah and 

VFM owed to their advisory clients.   

118. VFM’s compliance manual stated that custody of client assets was 

“generally defined as having direct or indirect access to such assets….  An 

investment adviser who itself or whose related person(s) have custody of Client assets 

is subject to extensive regulation, disclosure, and reporting requirements pursuant to 

Federal and State securities laws and regulations.”  VFM’s compliance manual 

further stated that “VFM takes measure to avoid,” among other things:  VFM 

personnel serving as trustee for client accounts; failing to meet the surprise 

examination requirements; and not having a reasonable basis, after due inquiry, for 

believing that a qualified custodian is sending quarterly account statements to the 

client.   

119. VFM negligently failed to implement these policies and procedures.  For 

example, as described above, while a representative of VFM, Darrah served as trustee 

for several of her advisory client accounts and did so for several years.  Darrah also 

changed the mailing address on several custodian accounts so that her clients stopped 

receiving monthly and quarterly statements from the custodians.   

120. VFM negligently failed to adopt and implement policies or procedures 

with respect to preparing and filing accurate Form ADV amendments and brochures.  

For example, Item 9 of VFM’s Form ADV stated that VFM did not have, in 

connection with the advisory services defendants provided to clients, custody of 

clients’ cash or bank accounts or securities.  These statements were inaccurate 

because Darrah had custody of the defrauded clients’ funds and prevented those 

clients from receiving their account statements from the custodians. 



 

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121. As the president and chief compliance officer of VFM, Darrah aided and 

abetted VFM in all of these compliance failures by not adopting or implementing 

these policies and procedures, and by carrying out the scheme in the manner 

described above.   

H. Darrah’s Invocation of Her Fifth Amendment Privilege Against Self-

Incrimination 

122. During the SEC’s pre-filing investigation, Darrah invoked her privilege 

against self-incrimination under the Fifth Amendment to the U.S. Constitution and 

refused to answer any questions concerning her conduct alleged in this complaint.   

FIRST CLAIM FOR RELIEF 

Fraud in the Connection with the Purchase and Sale of Securities 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) 

(against All Defendants) 

123. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 

124. As alleged above, defendants Darrah and VFM knowingly or recklessly 

engaged in a scheme to defraud their clients, and engaged in acts, practices or courses 

of business that operated as a fraud upon their clients, by misappropriating the 

defrauded clients’ funds and transferring them into accounts controlled by defendant 

Darrah. 

125. By engaging in the conduct described above, defendants Darrah and 

VFM, and each of them, directly or indirectly, in connection with the purchase or sale 

of a security, by the use of means or instrumentalities of interstate commerce, of the 

mails, or of the facilities of a national securities exchange:  (a) employed devices, 

schemes, or artifices to defraud; and (b) engaged in acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon other persons, 

with scienter. 

126. By engaging in the conduct described above, defendants Darrah and 



 

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VFM violated, and unless restrained and enjoined will continue to violate, Section 

10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b-5(a) and 10b-5(c) 

thereunder, 17 C.F.R. §§ 240.10b-5(a) & 240.10b-5(c). 

SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Sections 17(a)(1) of the Securities Act 

(against All Defendants) 

127. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 

128. As alleged above, defendants Darrah and VFM knowingly or recklessly 

engaged in a scheme to defraud their clients, and engaged in acts, practices or courses 

of business that operated as a fraud upon their clients, by misappropriating the 

defrauded clients’ funds and transferring them into accounts controlled by defendant 

Darrah. 

129. By engaging in the conduct described above, defendants Darrah and 

VFM, and each of them, directly or indirectly, in the offer or sale of securities, and by 

the use of means or instruments of transportation or communication in interstate 

commerce or by use of the mails, directly or indirectly employed devices, schemes, or 

artifices to defraud, with scienter. 

130. By engaging in the conduct described above, defendants Darrah and 

VFM violated, and unless restrained and enjoined will continue to violate, Sections 

17(a)(1) of the Securities Act, 15 U.S.C. §§ 77q(a)(1). 

THIRD CLAIM FOR RELIEF 

Fraud by an Investment Adviser 

Violations of Sections 206(1) and 206(2) of the Advisers Act 

(against All Defendant) 

131. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 



 

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132. As alleged above, defendants Darrah and VFM were investment advisers 

and therefore owed a fiduciary duty to each of their clients.  Defendants Darrah and 

VFM each breached their fiduciary duty to their clients by misappropriating the 

defrauded clients’ funds and transferring them into accounts controlled by defendant 

Darrah.  

133. By engaging in the conduct described above, defendants Darrah and 

VFM, and each of them, directly or indirectly, by use of the mails or means and 

instrumentalities of interstate commerce: (a) employed or are employing devices, 

schemes or artifices to defraud clients or prospective clients; and (b) engaged in or 

are engaging in transactions, practices, or courses of business which operated as a 

fraud or deceit upon clients or prospective clients, with scienter and/or negligence. 

134. By engaging in the conduct described above, defendants Darrah and 

VFM have violated, and unless restrained and enjoined, is reasonably likely to 

continue to violate, Sections 206(1) and (2) of the Advisers Act, 15 U.S.C. §§ 80b-

6(1) & 80b-6(2). 

FOURTH CLAIM FOR RELIEF 

Failure to Adopt and Implement Compliance Policies and Procedures 

Violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 

(against Defendant VFM) 

135. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 

136. As alleged above, at all relevant times, defendant VFM was an 

investment adviser registered under Section 203 of the Advisers Act [15 U.S.C. § 

80b-3].  By engaging in the conduct described above, defendant VFM, directly or 

indirectly, by use of the mails or means or instrumentalities of interstate commerce, 

engaged in acts, practices, or courses of business which were fraudulent, deceptive, or 

manipulative by providing investment advice to clients and failing to adopt and 

implement written policies and procedures reasonably designed to prevent violations, 



 

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by it or its supervised persons, of the Advisers Act and the rules that the SEC has 

adopted under the Advisers Act.  

137. By engaging in the conduct described above, Defendant VFM has 

violated, and unless restrained and enjoined will continue to violate, Section 206(4) 

of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-7 thereunder, 17 C.F.R. § 

275.206(4)-7. 

FIFTH CLAIM FOR RELIEF 

Aiding and Abetting Violations of 

Section 206(4) of the Advisers Act and Rule 206(4)-7 

(against Defendant Darrah) 

138. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 

139. As alleged in paragraphs 135 through 137 above, by engaging in the 

conduct described above, defendant VFM has violated Section 206(4) of the Advisers 

Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-7 thereunder, 17 C.F.R. § 275.206(4)-7. 

140. By engaging in the conduct described above, defendant Darrah 

knowingly or recklessly provided substantial assistance to, and thereby aided and 

abetted VFM in its violations of Section 206(4) of the Advisers Act and Rule 206(4)-

7 thereunder, in violation of Section 209(f) of the Advisors Act, 15 U.S.C. § 80b-9(f).   

141. By engaging in the conduct described above, defendant Darrah aided and 

abetted, and unless restrained and enjoined will continue to aid and abet violations of 

Section 206(4) of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-7 

thereunder, 17 C.F.R. § 275.206(4)-7. 

SIXTH CLAIM FOR RELIEF 

False Statements in Reports Filed with the SEC 

Violations of Section 207 of the Advisers Act 

(against All Defendants) 

142. The SEC realleges and incorporates by reference paragraphs 1 through 



 

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122 above. 

143. As alleged above, defendants Darrah and VFM made untrue statements 

of material fact in VFM’s Forms ADV concerning its custody of client assets and 

clients receiving at least quarterly account statements direction from their custodians.  

At all relevant times, defendant Darrah and VFM acted willfully and recklessly in 

making the untrue statements of material fact. 

144. By engaging in the conduct described above, defendant Darrah and VFM 

willfully made untrue statements of a material fact in reports VFM filed with the SEC 

or willfully omitted to state in such reports material facts required to be stated therein.  

145. By engaging in the conduct described above, defendants Darrah and 

VFM violated, and unless restrained and enjoined will continue to violate, Section 

207 of the Advisers Act, 15 U.S.C. § 80b-7. 

SEVENTH CLAIM FOR RELIEF 

Fraud by an Investment Adviser (The Custody Rule) 

Section 206(4) of the Advisers Act and Rule 206(4)-2 Thereunder 

(against Defendant VFM) 

146. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 

147.  As alleged above, at all relevant times, defendant VFM was an 

investment adviser registered under Section 203 of the Advisers Act [15 U.S.C. § 

80b-3].  By engaging in the conduct described above, defendant VFM, directly or 

indirectly, by use of the mails or means or instrumentalities of interstate commerce, 

engaged in acts, practices, or courses of business which were fraudulent, deceptive, or 

manipulative by having custody of client funds or securities without (1) having a 

reasonable basis , after due inquiry, for believing that the qualified custodian sends 

account statements at least quarterly to the clients and (2) ensuring that client funds 

and securities are verified by actual examination each year by an independent public 

accountant at a time chosen by the accountant without prior notice or announcement 



 

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to the adviser.  

148. By reason of the foregoing, defendant VFM, directly or indirectly, 

violated and, unless restrained and enjoined, will continue to violate Section 206(4) 

of the Advisers Act [15 U.S.C. § 80b-6(4)] and Rule 206(4)-2 thereunder [17 C.F.R. 

§§ 275.206(4)-2].  

EIGHTH CLAIM FOR RELIEF 

Aiding and Abetting Fraud by an Investment Adviser (The Custody Rule) 

Section 206(4) of the Advisers Act and Rule 206(4)-2 Thereunder 

(against Defendant Darrah) 

149. The SEC realleges and incorporates by reference paragraphs 1 through 

122 above. 

150.  As alleged in paragraphs 146 through 148 above, by engaging in the 

conduct described above, defendant VFM has violated Section 206(4) of the Advisers 

Act [15 U.S.C. § 80b-6(4)] and Rule 206(4)-2 thereunder [17 C.F.R. §§ 275.206(4)-

2].  

151. By engaging in the conduct described above, defendant Darrah 

knowingly or recklessly provided substantial assistance to, and thereby aided and 

abetted VFM in its violations of Section 206(4) of the Advisers Act and Rule 206(4)-

2 thereunder, in violation of Section 209(f) of the Advisors Act, 15 U.S.C. § 80b-9(f).   

152. By engaging in the conduct described above, defendant Darrah aided and 

abetted, and unless restrained and enjoined will continue to aid and abet violations of 

Section 206(4) of the Advisers Act, 15 U.S.C. § 80b-6(4), and Rule 206(4)-2 

thereunder, 17 C.F.R. § 275.206(4)-2. 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendants committed the 

alleged violations. 



 

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II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining defendants Darrah and VFM, and their 

officers, agents, servants, employees and attorneys, and those persons in active 

concert or participation with any of them, who receive actual notice of the judgment 

by personal service or otherwise, and each of them, from violating Section 17(a) of 

the Securities Act [15 U.S.C. §77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. 

§§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Sections 206(1) 

and 206(2) of the Advisers Act [15 U.S.C. §§ 80b-6(1) & 80b-6(2)]. 

III. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining defendant Darrah and VFM, and their agents, 

servants, employees and attorneys, and those persons in active concert or 

participation with any of them, who receive actual notice of the judgment by personal 

service or otherwise, and each of them, from violating Section 207 of the Advisers 

Act [15 U.S.C. § 80b-7]. 

IV. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining defendant VFM, and its agents, servants, 

employees and attorneys, and those persons in active concert or participation with 

any of them, who receive actual notice of the judgment by personal service or 

otherwise, and each of them, from violating Section 206(4) of the Advisers Act [15 

U.S.C. § 80b-6(4)], and Rules 206(4)-2 and 206(4)-7 thereunder, [17 C.F.R. §§ 

275.206(4)-2 & 275.206(4)-7]. 

V. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining defendant Darrah, and her agents, servants, 

employees and attorneys, and those persons in active concert or participation with 



 

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any of them, who receive actual notice of the judgment by personal service or 

otherwise, and each of them, from aiding and abetting any violation of Section 206(4) 

of the Advisers Act [15 U.S.C. § 80b-6(4)], and Rules 206(4)-2 and 206(4)-7 

thereunder, [17 C.F.R. §§ 275.206(4)-2 & 275.206(4)-7]. 

VI. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 

78u(d)(5)], permanently enjoining Defendant Darrah from directly or indirectly 

participating  in the offer, sale, or transfer of any security on behalf of any other 

person or any entity, including in her capacity as a trustee for such other person or 

entity; provided, however, that such injunction shall not prevent Defendant Darrah 

from purchasing or selling securities for her own personal account. 

VII. 

Order Defendants to disgorge all funds received from their illegal conduct, 

together with prejudgment interest thereon, pursuant to Sections 21(d)(3), 21(d)(5), 

and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(3), 78u(d)(5), and 78u(d)(7)]. 

VIII. 

Order Relief Defendant PC&J to disgorge any unjust enrichment received by 

PC&J from Defendants’ illegal conduct, together with prejudgment interest thereon, 

pursuant to Sections 21(d)(3), 21(d)(5), and 21(d)(7) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3), 78u(d)(5), and 78u(d)(7)]. 

IX. 

Order Defendants to pay civil penalties under Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. 

X. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 



 

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all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

XI. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

Dated:  October 20, 2023  

 /s/ Douglas M. Miller 
DOUGLAS M. MILLER 
Attorney for Plaintiff 
Securities and Exchange Commission