SEC Shuts Down $100 Million Ponzi Scheme; Florida Man Charged
On June 19th, 2018, the Securities and Exchange Commission (SEC) announced that enforcement officials were shutting down a $102 million Ponzi scheme. Several former FINRA advisors were implicated in the charges.
According to the SEC, more than 600 investors throughout the United States were defrauded in this Ponzi scheme. Six men have been charged by the agency, including Paul LaRocco, of Ocala, Florida. Here, our Miami Ponzi scheme attorneys review the SEC complaint, which was filed in the United States District Court for the Southern District of New York.
Understanding the Ponzi Scheme
Background
The SEC alleges that two men, Perry Santillo and Christopher Parris, were the lead perpetrators of the Ponzi scheme. Starting in the second half of 2011, these two men began buying the ‘books’ of retiring investment professionals. In the brokerage industry, an advisor’s book is his or her customers’ accounts. They would then work with a series of co-conspirators to try to persuade their new customers to take money out of traditional investments and to put them in private securities that they were personally offering.
Fraudulent Securities Offerings
The SEC determined that at least 316 investors put a total of $46 million into a company called First Nationale. Investors were told that was a financial services company with more than $146 million in assets. In reality, no evidence existed that First Nationale had any legitimate business.
The SEC also found that 229 investors put more than $22 million into a company called Percipience. Investors were informed that this company offered home improvement loans to qualified borrowers. However, once again, the SEC determined that Percipience had no legitimate business.
Finally, 183 investors put more than $25 million into a company called United RL. Investors were told that United RL provided loans to medical practices and other related businesses. Like the others, this company had no legitimate business.
Money Was Transferred Around and Siphoned Off
The defendants in this case made material misrepresentations, omitted material facts, and breached their fiduciary duty to investors. A substantial amount of investor money was simply siphoned off. The SEC contends that $20 million was taken by the perpetrators of the fraud to enrich themselves. This money was used on everything from Las Vegas nightclubs to mortgage payments.
As the investments were not legitimate, money was continuously transferred around to keep the Ponzi scheme afloat. This is how all Ponzi schemes temporarily survive. Investors are shown gains that exist only on paper. In all, the SEC believes that approximately $38.5 million in Ponzi-scheme like payments were made between the three companies.
Contact Our Miami Ponzi Scheme Lawyers Today
At Carlson & Associates, P.A., our skilled investment fraud lawyers are standing by, ready to protect your legal rights. If you lost a considerable amount of money in a Ponzi scheme, please do not hesitate to contact us today at 1-305-372-9700 for a confidential consultation. With an office in the heart of Miami, we represent investors all over South Florida, including in Miami Beach, West Palm Beach, and Jupiter.
Resources:
sec.gov/news/press-release/2018-110
sec.gov/litigation/complaints/2018/comp-pr2018-110.pdf