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On Thursday (February 13), the Securities and Exchange Commission (SEC) charged La Jolla resident James Y. Lee with defrauding his clients.

According to the agency's complaint, Lee portrayed himself as a securities expert with several advanced degrees. He boasted of his success in building a mortgage company but failed to disclose that he had been convicted of wire fraud and embezzlement related to the company and that he had been sentenced to 30 months in prison. He was ordered to pay $2.9 million in restitution but has made only "minimal payments," says the SEC.

He also failed to reveal that the agency in 2008 had ordered him to cease and desist from breaking securities laws in the peddling of penny stocks. Lee was charged this time with downplaying the risks of speculating in stock options and falsely inflated some clients' returns so he could collect undeserved management fees.

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