The Securities and Exchange Commission has sued Laguna Hills, Calif.-based Safevest and its principals for allegedly running a Ponzi scheme and misappropriating investor funds.

The U.S. District Court Judge for the Central District of California has also issued an order freezing assets and appointing a temporary receiver over Safevest and its affiliates.

Since last May, Safevest allegedly raised some $25 million from more than 500 investors to invest in futures commodities trading, according to the SEC. Unwary investors were told that the fund would generate daily profits ranging from 1.5% to 1.9%, and that they could receive their money back within 72 hours of requesting it.

In reality, no money was invested in futures, and requests by investors for withdrawal of their funds have either not been honored or have only been partially honored, according to the SEC. The SEC further alleges that the firm paid more than $18 million to investors in Ponzi-like fashion as well as misappropriating investor funds for the personal use of Ervin, Slye, and their family members.

In its lawsuit, the SEC is seeking preliminary and permanent injunctions, disgorgement, and civil penalties against Safevest and principals Jon Ervin and John Slye. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 12.