SEC Charges NY Firm, Fund Managers With Securities Fraud
The Securities and Exchange Commission is charging VERO Capital Management, its CFO Steven Downey, President Robert Geiger, and General Counsel George Barbaresi with secretly taking investor money to support a side business. The three men ran funds with offering documents that touted their objective as making good returns via mortgage-backed securities investments. Instead, after winding down the funds, the officers allegedly diverted around $4.4 million to undocumented bridge loans to an affiliate company that was supposedly in risk management. Investors and the funds’ directors were purportedly not notified that these unauthorized loans were taking place.
The SEC Enforcement Division also claims that VERO Capital and the three men compelled the funds to buy three notes totalling $7 million from an affiliate, which is a principal transaction that requires written notice and consent of a client before the transaction can be finished. The division claims that no attempt was made to get this mandatory notice. The regulator is alleging multiple violations of the Investment Advisers Act of 1940 and other rules.
California-based Stock Promoter Accused of Bilking Clients In Supposed Sales of Pre-IPO Twitter, Facebook Shares
The SEC is charging Efstratios “Elias” Argyropoulos and his firm Prima Capital Group with securities fraud. According to the regulator, the two parties fraudulently raised close to $3.5 million from investors for the supposed purchase of Facebook and Twitter shares before their initial public offerings.
However, the Commission claims that instead of buying the shares as promised, Prima Capital and Argyropoulos used the money mainly for day trading and to pay back certain investors who spoke out about not receiving the shares promised to them. As part of settling the civil charges, Argyropoulos consented to be barred from working for a brokerage firm or investment adviser and he will pay financial penalties. He and his firm settled without denying or admitting to them.
Also charged in a separate administrative proceeding for his involvement in the securities scam is Khaled A. Eldaher, who lives in Texas. While working with a registered firm, Eldaher allegedly reached a side deal with Argyropoulos to solicit investors and get 50% of the mark-up on shares of Facebook that he sold. He received over $15,400 for selling more than $360K worth of the shares. His brokerage firm fired him when it found out he was selling the securities for another party.
New York Lawyer Charged in Ponzi Scam Involving European Real Estate MBSs
Charles Bennett, an attorney based in Manhattan, faces SEC charges accusing him of running a Ponzi scam that bilked friends, relatives, and legal clients. The Commission says that he raised about $5 million by selling purported investments in a pool of funds that were invested in certain joint ventures. Investors were told that the cash would be used primarily to fund investments in real estate mortgage-backed securities in Europe. The securities supposedly were expected to yield lucrative return rates of 6-25% in a short period of time.
The regulator, however, contends that Bennett was running a scheme. The fund does exist but he is not connected to it or the joint ventures and didn’t invest anything in any of them at all. Instead, he allegedly misappropriated clients’ money to pay off earlier investors and support his lavish lifestyle. His Ponzi scam failed earlier this year.
SEC Charges California-Based Stock Promoter With Defrauding Investors Seeking Pre-IPO Facebook and Twitter Shares, SEC, December 23, 2014
Read More About Bennet’s Ponzi Scam (PDF)
The SEC Order Against Vero Capital Management and Its Executives (PDF)
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