When she was selling her $674 million advisory firm to Wealth Enhancement Group in 2021, Julie Anne Darrah was known about her rural California community as a business owner and advocate for senior citizens.
To many of her advisory clients, according to
Now the former owner of Vivid Financial Management — an Orcutt, California, hybrid RIA she helped start in 2015 — stands accused by
Both the federal regulator and Wealth Enhancement Group, a Plymouth, Minnesota-based firm with $70.8 billion in client assets, accuse Darrah of stealing $2.25 million from elderly female clients who turned to her for financial advice and decision making. She's also accused of taking $54,100 of that total from a trust set up for a person
In its suit filed in Minnesota federal district court, Wealth Enhancement Group says Darrah was able to use her position as "the daughter" her clients "never had" to take advantage of them in several ways. Many times she used the faith they placed in her to become their trustee or gain power of attorney and control over their brokerage and banking accounts, the suit alleges.
Once having authority over their assets, she would allegedly move money into her own bank account and buy real estate and luxury vehicles and invest in local businesses.
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In one instance of alleged fraud cited by the SEC, Darrah is said to have stolen more than $1 million from a widow — identified in court documents only by the initials S.S. — who was 75 when she first hired Darrah and now lives in a nursing home. Darrrah, according to the SEC, gained discretionary authority to trade in S.S.'s brokerage accounts after she and Vivid Financial Management were hired as advisors in 2015.
Darrah, according to the SEC, eventually used her discretionary authority to sell all the client's securities. Of the proceeds, she transferred $631,975 to herself, while using some of the other money to support her business enterprises or as payments to other advisory clients.
Louis Straney, a regulatory expert at
If the accusations against Darrah are true, it appears that she was able to play a role for her clients that might have otherwise been filled by relatives.
"Victims can be very vulnerable to a woman who pays attention to them, takes them to lunch and goes to church or tabernacle," Straney said. "They can be very responsive to people like that."
The SEC also alleges that Darrah obtained a "standing letter of authorization" enabling her to transfer some of the money out of the client's bank accounts. In April 2017, according to the SEC, Darrah was named S.S.'s trustee. By the end of the year, S.S.'s bank and brokerage statements were all being sent to Darrah. In March 2021, the SEC alleges, she set up a bank account for S.S.'s trust, making herself the sole signatory.
According to the SEC, "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."
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By the end of July this year, S.S.'s bank and brokerage accounts had gone from containing more than $1 million to $87,302. Darrah is also accused of stealing $578,400 from S.S.'s sister, identified only as M.S.
Darrah did not immediately respond to requests for comment. Wealth Enhancement Group, which discovered her alleged misdeeds following its purchase of Vivid Financial Management, confirmed that Darrah has been fired.
"We are conducting a thorough internal review with support from outside legal counsel and external experts and are cooperating with government authorities in their review of the matter," the firm said in an email statement. "The safety and security of our clients' assets is our number one priority."
Douglas Schulz, a securities lawyer and the president of Invest Securities Consulting, noted regulators have been calling particular attention to
"The elderly have always been one of the easiest targets," Schulz said. "First of all, who owns all the wealth in the country? I mean, other than the super rich who inherited money, or married it or started a tech company — the vast majority of it is in retirement accounts."
The SEC alleges the special needs trust Darrah is accused of stealing from was set up by her at the behest of a client identified by the initials J.S. The $54,125 held in it was meant for the client's brother. Of the money Darrah took, according to the SEC, she eventually paid $14,000 to the brother and kept $39,200 for herself.
Wealth Enhancement Group accuses Darrah of lying to it and to regulators around the time of the sale of Vivid Financial Management. She, according to the firm's suit, was not upfront about the fact that she was the trustee to several of her clients, instead claiming she was merely a "successor trustee." That meant she wouldn't have control of the underlying assets until the actual trustees had died.
She also, according to the SEC, said she hadn't borrowed money from clients, even though she had promissory notes from both S.S and M.S. And she, the regulator alleges, committed various breaches of the federal Custody Rule — which requires advisors to inform clients of new accounts opened in their names and regularly provide reports on the assets they hold.
Darrah further stands accused of submitting misleading information on the Form ADVs all advisory firms must file with the SEC once a year. Specifically, she's alleged to have falsely stated on forms turned in between March 2017 and March 2019 that neither she nor Vivid Financial Management had custody of client assets. According to the SEC, she later, on brochures filed from April 2019 to March 2021, acknowledged having custody of certain assets but falsely claimed to have set up safeguards to prevent abuses.
The SEC accuses Darrah and Vivid Financial Management of violating provisions of the Securities Exchange Act of 1934 and the Investment Adviser Act of 1940. It's seeking disgorgement of ill-gotten gains, prejudgment interest and monetary penalties. In its suit, Wealth Enhancement Group accuses her of 13 violations, including unjust enrichment and professional negligence, and seeks disgorgement and restitution for victims, among other things.
