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CEO of La Jolla financial firm gets year in prison for securities and tax fraud

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(File)

The chief executive of a La Jolla-based financial firm who pleaded guilty to federal securities and tax fraud charges was sentenced March 17 to one year in prison.

David John Nava, 63, head of Surf Financial Group LLC, also was ordered to pay more than $3.7 million in restitution and forfeit more than $3.1 million, according to the U.S. attorney’s office.

“This defendant stepped outside the boundaries of legal business practices and used his business acumen and connections for a criminal purpose,” said U.S. Attorney Randy Grossman. “He concocted a complex international scheme to deceive shareholders, launder proceeds of the fraud through Mexico and hide profits from the IRS.”

Prosecutors said Nava managed the firm despite being banned since 1994 from taking part in the securities industry.

According to the U.S. attorney’s office, Nava worked with others to convert publicly traded companies’ debt into unrestricted stock under false pretenses, then sold the stock.

Prosecutors said he directed others to write fraudulent attorney opinion letters that facilitated removing restrictions on stocks so they could be sold, with brokerage firms clearing the sale of shares of the restricted stocks on the basis of those letters. That allowed Nava and others to sell millions of shares, then move the proceeds into bank accounts under his
control, authorities said.

Nava, who made his guilty plea in October 2020, also admitted to enlisting a Mexican citizen to open a bank account in San Diego and transmit funds at Nava’s direction as a way of hiding Nava’s role in the money transmitting business. ◆