SEC targets Rancho Cucamonga businessman in alleged $28M fraud

A Rancho Cucamonga businessman's personal and corporate assets were frozen by a judge this week after federal regulators filed a civil complaint accusing the businessman of defrauding investors of millions of dollars.

Michael John Bowen, 57, allegedly raised $28 million from about 500 investors while lying and deceiving them about his Orange County-based business operations, according to the claim filed in Santa Ana federal court Monday by the Securities and Exchange Commission.

Bowen allegedly lied to investors about one of his companies going public in the United Kingdom, and portrayed business ventures as successful when in reality they were failing, according to the SEC complaint.

The SEC complaint alleges that Bowen misappropriated $3.8 million of investors' money, by using the funds to cover personal expenses and by transferring money to other entities he controlled.

Read the SEC news release here, and read a PDF of the SEC's complaint here.

U.S. District Judge James Selna issued a temporary restraining order Monday freezing Bowen's assets, requiring accountings from his companies, prohibiting the destruction of documents, and ordering expedited discovery in the case.

Bowen could not be reached for comment Wednesday. No one answered the door at his home in the 12500 block of Churchill Drive, and he did not respond to an e-mailed interview request.

In the course of the alleged fraud, Bowen used more than $3.8 million of investor money for inappropriate uses, the SEC alleged.

Bowen used the money to pay for trips to Hawaii and Costa Rica, and spent $170,000 to purchase luxury cars and motorcycles, according to the SEC's complaint.

The SEC also alleged that Bowen used investors' money to contribute $45,000 to the National Republican Congressional Committee, which funds congressional races for Republican candidates.

The bulk of the alleged fraud occurred in the course of Bowen's fundraising to construct a storage facility in Lake Havasu City, Ariz., the SEC alleged.

After forming Orange-based Eagle Storage & Development, LLC in 2003, Bowen raised about $24 million from about 470 investors, promising eight-percent annual returns, according to the SEC's complaint.

Federal regulators said none of the investors ever received returns from the project.

In promotional materials seeking investors, Bowen and his employees touted the project's success even after the company defaulted on a loan and a judge placed its facility under receivership in October 2007, according to the SEC's complaint.

Bowen allegedly conducted similar frauds -- raising about $4 million from investors -- in business ventures to build homes in Kingman, Ariz., and to purchase and lease helicopters providing charters for tourists on the Hawaiian island of Kauai.

In advertising his projects, Bowen and his employees falsely promised investors that Eagle Storage would be consolidated with an associated Bowen-owned company and shares would soon be publicly traded in the United Kingdom, the SEC alleged.

But even as the company told investors the public offering would yield high returns, in reality Bowen knew a U.K. offering was impossible because his company's financial records were in such disarray that an accountant was unable to perform a prerequisite audit.

Bowen also failed to disclose to investors that in 2005, the Alabama Securities Commission ordered him to stop selling unregistered shares for his storage facility.