Equipment lessor faces fraud charges

The SEC alleges that Essex and Iannelli provided one investment adviser with fake financial statements that overstated Essex’s assets by more than $20 million, and falsely told another investment adviser that Essex would assign equipment leases to its clients when the same leases had already been pledged as collateral for bank loans.

The SEC’s complaint further alleges that as Essex’s finances deteriorated, the company resorted to frequent Ponzi-like payments, paying interest and principal to existing Essex investors with funds raised from newer investors. At the same time, Iannelli allegedly paid himself millions of dollars in bonuses and siphoned millions of dollars out of Essex through interest-free loans with no maturity date. According to the SEC, Iannelli personally owes the company over $6.4 million.

The regulator has filed a legal complaint in the US District Court for the Central District of California, and is seeking repayments, financial penalties and injunctions against both Iannelli and Essex. The SEC has also requested emergency action, including a preliminary injunction, an asset freeze, and the appointment of a receiver over Essex.