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La Jolla financial firm CEO sentenced for securities, tax fraud

Prison bars
Posted at 5:31 PM, Mar 17, 2022
and last updated 2022-03-17 20:31:46-04

LA JOLLA, Calif. (CNS) — The CEO of a La Jolla-based financial firm who pleaded guilty to federal securities and tax fraud charges was sentenced Thursday to one year in prison.

David John Nava, 63, head of Surf Financial Group LLC, was also ordered to pay more than $3.7 million in restitution and forfeit over $3.1 million, according to the U.S. Attorney's Office.

Prosecutors said Nava managed his firm despite being banned since 1994 from taking part in the securities industry.

According to the U.S. Attorney's Office, Nava worked with others to convert publicly traded companies' debt into unrestricted stock under false pretenses, then sold the stock.

Prosecutors said he directed others to write fraudulent attorney opinion letters that facilitated removing restrictions on stocks so they could be sold, with brokerage firms clearing the sale of shares of the restricted stocks on the basis of those letters. That allowed Nava and others to sell millions of shares, then move the proceeds into bank accounts under his control, according to the U.S. Attorney's Office.

He also admitted to enlisting a Mexican citizen to open a bank account in San Diego and transmit funds at Nava's direction as a way of hiding Nava's role in the money transmitting business.

"This defendant stepped outside the boundaries of legal business practices and used his business acumen and connections for a criminal purpose," said U.S. Attorney Randy Grossman. "He concocted a complex, international scheme to deceive shareholders, launder proceeds of the fraud through Mexico, and hide profits from the IRS."