A Minnesota-based company has sued a Santa Maria Valley business leader, contending that Julie Darrah stole more than $1 million from clients while acting as their financial adviser and curating her reputation as a wealthy community patron.
Filed Friday in federal court in Minnesota by Wealth Enhancement Group, the civil lawsuit names Darrah as the lone defendant.
Darrah co-founded Vivid Financial Management, which was acquired by Wealth Enhancement Group in late 2021. The announcement said the Central Coast company’s six advisers with offices in in Orcutt, Lompoc and Arroyo Grande “collectively oversee $674 million in client assets.”
Reached by phone Tuesday afternoon, Darrah, who co-owns local businesses and has served on the boards of nonprofit organizations, declined to comment about the allegations upon the advice of her attorneys.
The 36-page civil complaint contends that Darrah “curated her reputation as a wealthy community patron” by backing local businesses.
“For vulnerable clients, Darrah was more than a financial advisor: She spent many years — for some clients, over a decade — gaining their trust by incrementally inserting herself into their lives as ‘the daughter they never had,'” the complaint states.
The lawsuit contends that Darrah’s deception fooled sophisticated financial institutions while targeting vulnerable clients and shielding her actions from colleagues.
“She did so not only by defrauding the clients and their families, but also by deceiving her own office staff and evading multi-layer anti-fraud safeguards of multiple leading financial institutions,” the civil complaint said. “Darrah covered her tracks by ingratiating herself into her clients’ family affairs, visiting them at home and assisted-living facilities, counseling them as they grieved, accompanying them on medical appointments — all in ways that ran afoul of financial advisor professional boundaries.”
The complaint spells out elaborate steps that Darrah allegedly took to defraud two elderly women.
Darrah was placed on leave in July and terminated for cause on Sept. 15, removing her access to clients’ accounts.
On Monday evening, her name remained on the door of the Wealth Enhancement Group’s office at 340 E. Clark Ave. in Old Town Orcutt.
“WEG is informed and believes that, since 2016, Darrah has misappropriated several million dollars of client funds — the great majority before the Vivid Transaction — in violation of the law and, beginning in 2022, also in violation of WEG policies and business practices,” the lawsuit states.
Darrah’s scheme avoided detection for many years by targeting vulnerable clients, forming close relationships with them — taking them to medical appointments, shopping and hair appointments to gain their trust, WEG’s lawsuit contends.
The lawsuit also maintaines that Darrah concealed outside business activities from WEG, including involvement in a deli, bakery, restaurant, sausage company and a concrete company, owning and managing various buildings.
Some of the outside business activities, or OBAs, are losing money, the lawsuit contends.
“On information and belief, in an effort to keep these OBAs afloat, Darrah has purportedly ‘loaned’ her failing OBAs around $3.6 million, which she apparently has been funding with money that she has been stealing from clients since before the Vivid Transaction,” according to the lawsuit.
After being placed on leave, Darrah allegedly visited the second victim at her home and pledged to return the funds by Sept. 14.
On Sept. 20, Darrah visited a third victim, prompting WEG to send a cease and desist letter to Darrah to protect clients.
The lawsuit cites 13 causes of action, including fraudulent inducement by misrepresenting Vivid’s financial status, fraud following execution of the purchase agreement, breach of contract, negligent misrepresentation, professional negligence, unjust enrichment and more.
In addition to asking for damages well above $75,000, the lawsuit seeks complete or partial rescission of the purchase agreement, restitution in an amount to be proven at trial; declaratory relief, including declaratory judgment; disgorgement of ill-gotten gains, well in excess of $1 million; and attorneys’ fees and costs of suit incurred herein or in other proceedings.
Darrah’s “fraudulent and unlawful conduct” has led to “a regulatory inquiry,” but the lawsuit did not identify the agency.
A Securities & Exchange Commission’s Investment Adviser Public Disclosure noted Darrah’s recent termination, saying it occurred because of an internal review for fraud, wrongful/unauthorized taking of client property and for violations of investment-related securities law including those related to custody of client assets.
A civil lawsuit represents only one side of the allegations, and Darrah is expected to file a response at some point.
Before launching Vivid, Darrah worked for Mutual Securities Inc. in Camarillo and Woodland Leishman & Associates in Santa Maria.
Darrah, a Lompoc native, has ownership stake in local businesses including The Homestead, a deli in Old Town Orcutt, Cups & Crumbs in the Santa Maria Valley, Central Coast Specialty Foods in Lompoc and the Sausage Co. in Orcutt.
As of Monday, she remained listed as the board president for the Orcutt Area Seniors in Service, or OASIS, Center, having joined the board in 2021. By Tuesday evening, her name had been removed from the online listing of board members.
In 2019, she was named to the Marian Regional Medical Center Foundation board but no longer serves on the panel.