The United States Securities and Exchange Commission brought suit against Titanium Capital LLC and its principal, Henry Abdo, for allegedly running a Ponzi scheme that raked in around $5.3 million from more than 150 investors from the United States and foreign countries. In addition, the SEC filed charges against a Titanium representative, Barsh, in connection with her involvement in the solicitation of investors, specifically alleging she offered and sold Titanium securities to investors without being securities registered or having the benefit of an exemption from such registration.
The SEC’s complaint contends that from 2014, Abdo and Titanium falsely represented to investors that it used their capital to invest in a Multi-Currency Investment Fund that was purportedly backed by a proprietary currency exchange, that the investment never sustained a monthly loss, and that it produced returns including over 100% compounded interest on a five-year investment.
As part of its pitch to recruit investors, defendants Titanium and Abdo purportedly represented that Titanium was registered with the SEC, and closely regulated by it. Yet, per the SEC’s allegations in its enforcement action, Titanium was never registered with the SEC, the securities it offered and sold were not registered, and the SEC apparently did not discover any evidence proving the existence of the “proprietary” currency exchange. In fact, per the SEC, Abdo and Titanium utilized almost all of the investors’ capital to: (1) make Ponzi-type payments to earlier-in-time investors, (2) pay related parties, and (3) buy jewelry and fund casino trips for Abdo.
Brought in the U.S. District Court for the Southern District of Florida, the SEC’s complaint charges Titanium and Abdo with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, including Barsh, the registration provisions of Section 5 of the Securities Act (prohibiting the sale of non-exempt, unregistered securities). The SEC has requested relief including an injunction, the return of ill-gotten gains (known as disgorgement), the imposition of civil monetary penalties, a permanent bar from engaging in securities sales in the future, as well as an officer and director bar for Abdo.
The SEC also named certain of Abdo’s relatives as relief defendants, and accordingly seeks the return of any ill-gotten gains they may be holding. A relief defendant in a SEC enforcement action is not alleged to have violated the federal securities laws; but rather is named because he is unjustly holding, without legal claim, monies sourced from the alleged illegal securities activity that should, as a matter of equity, be returned to investors.
A bit surprising, in my opinion, is that the federal criminal authorities in the U.S. Attorney’s Office for the Southern District of Florida brought criminal charges against Abdo, even though he raised only around $5.3 million. In my decades of experience defending SEC securities fraud investigations and enforcement cases, including Ponzi Schemes, the Department of Justice will not typically get involved unless either the monies raised are in the tens of millions, the victims are vulnerable (elderly and retired, for example) and/or the defendant is a recidivist.
Contact a Ponzi scheme Defense Lawyer
David Chase, Esq. is a SEC defense lawyer and former SEC prosecutor who now runs his own SEC defense law firm, representing those under SEC investigation nationwide, including in Chicago, Miami and New York. If you just received an SEC Subpoena, you may contact David toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com, and can visit the Firm’s website for more information on SEC investigations and prosecutions involving Ponzi Schemes, insider trading and market manipulations, at: www.securitiesfrauddefense.com.
