David Nava, Securities and Tax Fraud, California 2021

David Nava, the 62-year-old CEO of Surf Financial Group LLC, pleaded guilty to conspiring with others to defraud shareholders of publicly traded companies, transmitting millions of dollars through the operation of an unlicensed money-services business in California, and falsifying multiple years of federal tax returns.

According to the plea agreement, Nava was at all relevant times the CEO of Surf Financial Group LLC, a financial-services firm based in La Jolla, California. In 1994, federal securities regulators permanently banned and censured Nava from participating in the securities industry. Despite the two-decades-old ban, Nava admitted in the plea agreement that he and other co-conspirators, including a licensed attorney, converted the debt of various publicly traded companies under materially false and fraudulent pretenses into unrestricted stock and then sold the stock for profit.

Nava further admitted that he and his co-conspirators carried out their fraudulent scheme by entering into agreements in which Nava sold shares of various entities’ stock in public-market exchanges, only after fraudulently claiming an exemption from the U.S. Securities and Exchange Commission’s (SEC) registration requirements for selling securities in the public marketplace.

In the plea agreement, Nava admitted that he directed at least one attorney, as well as other co-conspirators, to prepare fraudulent attorney opinion letters that were used to remove restrictions on various publicly traded companies’ stocks so that they could be freely traded on the open market. These fraudulent attorney opinion letters permitted Nava and his co-conspirators to sell their shares of stock at times of their choosing and unlawfully to circumvent the SEC’s regulations governing the offer and sale of securities.

Nava also admitted that, from approximately 2017 to 2018, he owned and operated an unlicensed money transmitting business as a means to transmit financial proceeds from foreign locations, including Hong Kong and the Bahamas, all of which disguised the source, origin, and control of such financial proceeds. Nava directed the Mexican resident to fraudulently open a deposit account in his name at a financial institution in San Diego, and to transmit funds as a nominee and as directed by Nava.

Nava pleaded guilty to one count of conspiracy to commit securities fraud, one count of operating an unlicensed money transmitting business, and one count of tax fraud before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California. Sentencing is set for January 8, 2021.

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