Investment Advisor Sued Over Its Work for Tonga

Federal regulators on Monday sued a California investment advisor who they say gave bad advice that caused the South Pacific nation of Tonga to lose $24.5 million on risky securities.

Wellness Technologies Inc. and its president, Jesse Dean Bogdonoff of Penngrove, Calif., were named in a civil complaint filed in federal court in San Francisco, the Securities and Exchange Commission said. Bogdonoff made $2 million in commissions and at least $540,000 in advisory fees from the Tonga Trust Fund, the complaint said.

Tonga’s money was invested in companies that were struggling to stay solvent or had highly speculative businesses, including one that sold investments in “viatical contracts,” agreements to purchase the life insurance policies of terminally ill or elderly people. The viatical company declared bankruptcy and Tonga lost $20 million on that investment, the SEC said.

Wellness and Bogdonoff, 48, recommended “investments that they knew were much too risky for the trust” and hid the problems, Helane Morrison, district administrator for the SEC’s San Francisco office, said in a statement.

Joseph Burton, Bogdonoff’s attorney, didn’t return a call seeking comment.

Tonga consists of 171 islands in the South Pacific between Hawaii and New Zealand. David Koll, consular general for Tonga’s consulate in San Francisco, didn’t return a message left at his office.