Enforcement News: Former California Financial Advisor Charged With Allegedly Operating Decades-Long Million Ponzi Scheme

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Posted on: Jul 30 2025

This Blog has written about Ponzi schemes on numerous occasions. A Ponzi scheme is a type of investment fraud where returns to earlier investors are paid using investment capital from new or existing investors, rather than from legitimate profits earned through the enterprise’s business activities. Ponzi schemes persist by exploiting trust, promising high returns with little risk, and using money from new or existing investors to pay “profits” to earlier ones.

[Eds. Note: This Blog has written scores of articles addressing SEC enforcement actions and the settlement of enforcement actions involving Ponzi schemes. To find such articles, please visit the Blog tile on our website and search for “Ponzi schemes” or any SEC enforcement action issue that may be of interest to you.]

The Securities and Exchange Commission (“SEC”) has intensified its crackdown on Ponzi schemes and Pyramid schemes, focusing on enhanced enforcement, investor education, and transparency. Despite the SEC’s efforts, promoters of Ponzi schemes continue to find ways to perpetrate their fraud.

In today’s article, we examine an enforcement action brought by the SEC against Edwin Emmett Lickiss (“defendant”), a former investment adviser located in the Bay Area of California.

Between 1998 and September 2024, defendant was a financial advisor who owned and operated Foundation Financial Group, a firm that provided investment services to investors in the Northern District of California, Idaho, and throughout the United States. Defendant was a registered broker until 2014, when the Financial Industry Regulatory Authority suspended his broker’s license. Despite the suspension and loss of his broker’s license, defendant allegedly continued to solicit and obtain investments from investors until around September 2024.

As part of his scheme, defendant allegedly represented to investors that he would invest their funds in government bonds and other bonds. To induce his victims to invest their money with him, defendant allegedly claimed that he had exclusive access to bonds that paid very high rates of return, including rates in excess of 20 percent. Defendant allegedly described the bonds as safe, secure, and tax-free, and is alleged to have falsely claimed, among other things, that the bonds could be redeemed at any time. Though the bonds allegedly paid interest on a monthly basis, defendant advised investors to roll them over.

To convince investors that he had invested their funds as promised, defendant allegedly gave investors fraudulent promissory notes that included the terms of the bond investments and purported to track investors’ total investment in the bonds. According to the SEC, defendant fraudulently offered and sold to investors approximately $12.7 million in promissory notes, which purported to pay interest rates of between 9 and 32 percent per annum.

Defendant also allegedly made payments to investors, some of whom were repaid in full, to lull them into believing that they were receiving a return on their investment. Defendant allegedly described the payments as interest that had accrued on the bonds, when, in fact, the payments were allegedly made with funds defendant obtained from subsequent investors.

Instead of investing the funds as promised, defendant allegedly used investors’ funds to pay earlier investors, as in a Ponzi scheme, and for his personal use, including cash withdrawals, home renovations, travel, and car, mortgage, and personal credit card payments. In all, defendant allegedly obtained at least $9.5 million from no fewer than 50 investors.

The SEC filed its complaint (here) in the U.S. District Court for the Northern District of California. In the complaint, the SEC charged defendant with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctive relief, including conduct-based injunctions against defendant, disgorgement with prejudgment interest, and a civil penalty.

In a parallel action, the U.S. Attorney’s Office for the Northern District of California announced that a federal grand jury indicted defendant, on one count of wire fraud and one count of money laundering in connection with the alleged fraudulent scheme (here).

[Eds. Note: It must be remembered that an indictment merely alleges that crimes have been committed. Like all defendants, defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.]
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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

Tagged with: Ponzi Scheme, Regulatory Defense and Investigations, Securities, Securities Act of 1933, Securities and Exchange Commission, Securities Exchange Act of 1934, Securities Fraud