Articles Posted in SECURITIES FRAUD

The Securities and Exchange Commission has filed fraud charges in Federal Court in Miami, Florida against the owners and operators of Jay Peak Resort, a Vermont-based ski resort, and related businesses. The complaint alleges that millions of dollars were raised under the EB-5 Immigrant Investor Program.

According to the tramcomplaint, the main perpetrators were Ariel Quiros of Miami, and William Stenger of Newport, Vt., who raised in excess of $350 million from foreign investors on promises of green cards and returns on their invested monies. The money was to be used to construct ski resort facilities and a bio-medical research facility in Vermont.

The perpetrators promised that investor money would only be used to finance specific projects, but instead it is alleged that over $200 million was used for other purposes, $50 million of which Quiros used for personal expenses, including the purchase of a luxury condominium, income tax payments, and the acquisition of another Vermont ski resort, Burke Mountain, which he renamed Q Burke Mountain, and turned over to his son to manage.

 

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September 10, 2009 – Sandra Venetis was allegedly operating her three entities, Systematic Financial Services, Inc., Systematic Financial Associates Inc., and Systematic Financial Services LLC, as a Ponzi scheme. According to the complaint filed by the Securities and Exchange Commission (“SEC”), Venetis bilked investors for at least $11 million since 1997 by promising returns of 6 to 11 percent per year. Apparently, Venetis misappropriated investor funds for her own personal use and for her relatives.

Apparently, Venetis lured investors by offering promissory notes, fixed income investments, and other supposedly lucrative investments. The complaint alleges that Venetis claimed that the promissory notes were backed by the Federal Deposit Insurance Corporation (“FDIC”) and that the interest payments would be tax free. Venetis also apparently told some investors that their money would be used for loans to various doctors backed by Medicare reimbursements. The SEC claims that Venetis completely made up the names of the doctors and falsified their signatures on loan documents.

According to the complaint, the promissory notes and other offerings were not backed by any legitimate investments. Venetis apparently used the money to pay her personal and business debts, as well as finance her gambling and extravagant vacations. Venetis also allegedly bought a house for her daughter and paid for improvements on her brother’s home.

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June 30, 2010 – Daniel Spitzer allegedly operated several business entities as a foreign currency investment fraud, which raised over $105 million from 400 investors. This week, the Securities and Exchange Commission (“SEC”) filed a complaint that claims Spitzer misled investors from at least 2004 until as recently as March 2010. Spitzer, a resident of St. Thomas, recruited investors from all over the United States.

According to the complaint, Spitzer and his sales team told investors that their money would be placed in investment funds that would, in turn, primarily be invested in foreign currency. Spitzer allegedly enticed new clients by claiming he was an extremely successful fund manager and always produced exorbitant annual returns, including one year of 180%. To facilitate his purported scheme, Spitzer allegedly issued phony documents, including false K-1s, to clients.

The SEC claims that, in reality, Spitzer only invested $30 million of client funds, including $16.5 million in a foreign entity that ultimately lost money and was liquidated back to Spitzer. Spitzer also apparently invested $16 million in money market funds but only earned a few thousand dollars.

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June 17, 2010 – Milowe Brost, Gary Sorenson, Larry Adair, Ward Capstick, Bradley Regier, and Martin Werner allegedly operated their entities Syndicated Gold Depository, Merendon Mining Corp. Ltd., Merendon Mining (Nevada) Inc., and the Institute for Financial Learning Group of Companies, Inc. as a massive $300 million Ponzi scheme. Last week, the Securities and Exchange Commission (“SEC”) filed a complaint that alleges Brost and Sorenson were the leaders of the alleged Gold mining fraud, which convinced 3,000 investors to cough up large amounts of money. merendon_logo.jpg

The SEC claims that Brost led a sales team, called Structurists, which held investment seminars where they claimed to be independent financial professionals. At the seminars, Bost and Sorenson.jpgthe men allegedly pushed investments in gold mining businesses that could generate annual returns ranging from 18 to 36 percent.
The SEC also alleges that Brost and the Structurists promised that all investments were collateralized by gold.

The complaint claims that Brost and his sales team sold shares in various entities and then through a unique “structuring” process that ultimately led to the transfer of funds from Syndicated Gold Depository to Merendon Mining Corp. Ltd. Apparently, Sorenson claims to be an independent businessman making loans to Merendon, but in reality controlled the company.

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March 30, 2010 – Enrique Villalba allegedly used his various business entities Money Market Alternative, L.P., Money Market Alternative Ltd., Money Market Plus, and Hybrid Money Market Management LLC to perpetrate a $39 million Ponzi scheme. In an Ohio federal court on Monday, the Securities and Exchange Commission (“SEC”) filed a complaint against Villalba alleging that he ran an investment scam from 1996 to 2009 that defrauded at least 26 investors.
According to the complaint, Villalba, 47, from Cuyahoa Falls, Ohio and a graduate of West Point, solicited investors by offering annual returns of 8% to 12% on their money. Apparently, Villalba claimed his “Money Market Plus Method” and “momentum filter” could predict changes in the market. Villalba also allegedly claimed that client funds would be secured by stop orders that would not allow the investments to lose more than 2% of the initial amounts. The SEC claims that Villalba promised clients that their money would only be invested in securities, including S&P 500 Index contracts, treasury bills or interest earning money market accounts.

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March 24, 2010 – Douglas Vaughan allegedly ran his entities The Vaughan Company, Realtor’s Inc., and Vaughan Capital, LLC as an investment scam that robbed approximately 600 investors of $80 million. On Tuesday, the Securities and Exchange Commission (“SEC”) filed a complaint in a New Mexico federal court against Vaughan and his entities alleging fraud.

Apparently, Vaughan lured investors by offering promissory notes with interest rates between 10 and 25 percent over one to three years. Vaughan allegedly claimed that the notes were secured by various real estate properties and his personal assets. The SEC claims that in reality, Vaughan used client funds to make Ponzi payments to other investors and pilfered funds for personal use. The complaint further alleges that Vaughan transferred almost all of the money raised through Vaughan Capital, LLC to The Vaughan Company.

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March 4, 2010 – The Securities and Exchange Commission (“SEC”) filed a complaint against Gaston Cantens and Teresita Cantens for allegedly running their real estate firm, Royal West Properties, Inc., as a Ponzi scheme. According to the complaint, the Cantens’ raised over $135 million from over 400 investors, who were primarily Cuban-Americans from the South Florida area. Royal West Properties Logo.gif

The SEC claims that the Cantens’ lured investors by offering promissory with annual returns ranging from 9 to 16 percent. Their promises were backed by the purported success of Royal West’s real estate business and claims that the Cantens’ were personally worth $65 million, even signing personal guarantees to some investors. The Cantens have operated Royal West Properties since 1993 and the SEC claims that they started using it as an investment scam in 2002.

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January 13, 2010 – Neil Moody and his son, Christopher Moody, have been linked by the SEC to a hedge fund scam run by Arthur Nadel. The Moodys used Nadel as the sole investment adviser for their Sarasota, Florida based hedge funds: Valhalla Investment Partners, L.P., Viking IRA Fund, LLC, and Viking Fund, LLC. On Monday, the SEC filed a complaint in federal court in
Moody, Chris and Neil.jpgthe middle district of Florida, alleging that the Moodys provided false information to investors about their funds.

According to the SEC, from 2003 to December 2008 the Moodys disclosed information to their clients and future investors, which grossly overstated the historical returns and current value of their funds by as much as $160 million. The complaint claims that statements made by the Moodys were based on Nadel’s unverified figures. The SEC claims that there were several indications to the Moodys that should have caused them to question Nadel’s numbers.

The SEC also claims that the Moodys told investors that they made all of their own investment and trading decisions, when in fact it was Nadel that maintained virtually total control over these decisions. According to the complaint, the Moodys did not exercise any legitimate supervisory role over Nadel, and failed to independently verify any of his numbers.

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December 21, 2009 – Michael Bowen, 57 from Rancho Cucamonga, California, operated a Ponzi scheme by selling unregistered securities, purportedly investments in helicopter and storage facilities. These included Eagle Development Enterprises, Inc., Eagle Storage & Development, LLC, and Eagle Aviation Sales & Leasing, LLC. The SEC‘s complaint, filed in a federal court in central California, alleges that from 2003 to 2009 Bowen raised over $28 million from at least 500 investors nationwide.

According to the SEC, Bowen lured investors by selling securities and membership interests in his
Eagle Logo.jpgcompanies. The SEC claims that these offerings were backed by misrepresentations about an upcoming public offering in the United Kingdom, inflated financial disclosures, and falsities about how investor funds would be used. The SEC complaint also claims that Bowen used a sales team who made cold calls to solicit investors.

According to the SEC, from 2003 to 2008, Bowen and his staff sold membership interests in Eagle Storage telling investors that they would receive 8% annual returns and that their money would be used to construct storage facilities. None of these investors were ever paid back and the SEC claims that Bowen did use a portion of investor funds, along with a $6.6 million loan, to purchase a storage facility. However, Eagle Storage subsequently defaulted on the mortgage. The SEC alleges that Bowen did not disclose to investors that Eagle Storage had been issued a cease and desist order in Alabama.

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December 9, 2009 – Rockford Funding Group LLC, a New York financial firm controlled by Genadi Yagodayev, was an investment scam, according to the Securities Exchange Commission. Rockford lured customers who believed that they were investing in “Fixed Dividend Contracts,” which purportedly generated 15 percent per year or more from structured settlements of private lawsuits, according the Complaint filed by the SEC this week. From March to November 2009, Rockford raised at least $11 million from over 200 investors.

logo.gifYagodayev, and twelve other foreign companies who allegedly received payments from Rockford, were named as relief defendants, including the following: Bookmann Agency, LLP, Houseberg Impex, Inc., Infinita Plus Trading Ltd., Intercity Transit Ltd., Madisa Ltd., Milton Benefits LLP, Pacific Gain Technologies Ltd., Partner Asia Distribution Ltd., Rockford Industry Ltd., Star Trading Inc., Sunrise Import & Export Inc., and Traseks Ltd.

According to the SEC, Rockford marketed itself through its web site and by making cold calls to potential customers, promising an annual return of 15%, and claiming that client funds would be invested in structured settlements from private lawsuits. The SEC maintains that in reality Rockford did not hold interests in any structured settlements, but rather used investor funds to make payments to older investors using new victims’ money.

The SEC Complaint alleges that during the nine months it operated, Rockford sent over $10.4 million to bank accounts outside the U.S. in the name of entities controlled by Yagodayev. Most were located in Latvia and Honk Kong. The transfers were ostensibly made to cover construction costs and other expenses unrelated to the Rockford investments.

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