The Securities and Exchange Commission charged three New York-based investment firms and four former senior officers with fraud, misuse of client assets and other securities laws violations, when they masked financial troubles within their $66 million advisory business.

The firms told investors their money was in stable, safe investments designed to provide steady streams of income, the SEC said, while they and the officers tried to stem "deepening financial problems."

The three firms are affiliates: West End Financial Advisors LLC (WEFA), West End Capital Management LLC (WECM), and Sentinel Investment Management Corporation, the SEC said. The operation's investment adviser William Landberg was responsible for ""failed investment strategies" and misusing investor assets for his personal needs. Also named in the case are president Kevin Kramer, chief financial officer Steven Gould and controller Janis Barsuk.

“The investment advisers here grossly abused the trust of their clients,” said George S. Canellos, Director of the SEC’s New York Regional Office. “They misappropriated and commingled their clients’ assets and sustained the illusion of a viable and successful business through a range of false representations.”

The firms raised milions by "touting false positive returns," said David Rosenfeld, Associate Director of the SEC’s New York Regional Office. The parties concealed "fraudulent bank loans, cash flow problems, and the misappropriation of investor assets.”

The four senior officers named by the SEC could not be reached for immediate comment.

According to the SEC’s complaint, Landberg used substantial amounts of fraudulently-obtained bank loans to make distributions to some West End fund investors, thereby sustaining the illusion that West End’s investments were performing well. During the same period, Landberg also misappropriated at least $1.5 million for himself and his family.

The SEC further alleges that Gould and Barsuk knew, or were reckless in not knowing, that Landberg was defrauding a bank that provided loans to a West End fund by misusing funds in a related interest reserve account.

The actions took place in 2008 and 2009, the SEC said.

The SEC charged Landberg, Kramer, Gould, WEFA, WECM, and Sentinel with violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. In addition, Landberg, WEFA, WECM, and Sentinel are charged with violating the antifraud provisions of the Investment Advisers Act of 1940. Kramer, Gould, and Barsuk are charged with aiding and abetting violations of the Advisers Act. Barsuk is also charged with aiding and abetting violations of the antifraud provisions of the Exchange Act.

The SEC seeks to enjoin each defendant from future violations of the securities laws as well as monetary relief, the imposition of an independent monitor, and is pursuing other sanctions.