Facts

The Securities and Exchange Commission (SEC) filed a complaint against Craig Rumbaugh and two companies he owned and controlled. The complaint concerned Rumbaugh's dealings with his and his companies' clients in reliance of a third party business opportunity.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendants misled clients of Rumbaugh Financial, Inc. (RFI) and Desert Strategic Equity, LLC (DSE) about the terms of their investments. Defendants further concealed their self-dealings while receiving commissions from Susan Werth to recommend certain investment opportunities to RFI and DSE clients. Plaintiff contended that defendants were running a Ponzi Scheme that led to over $3 million being fraudulently invested into Werth's companies that resulted in loss to defendants' clients.

DEFENDANTS' CONTENTIONS: Defendants denied knowingly engaging in the Ponzi scheme. Instead, defendants alleged having been manipulated by Werth's companies through Werth's misrepresentation of interest rates. Ultimately, defendants neither admitted or denied liability but agreed to the disgorgement and accompanying injunction in lieu of further litigation.

Result

Defendants were held jointly liable to plaintiffs for $676,000 in disgorgement, including $137,808 in prejudgment interest. Rumbaugh also consented to a civil liability payment of $192,768. The judgment also permanently enjoined defendants from violating the law.