The Securities and Exchange Commission recently filed charges against an individual for acting as an unregistered investment adviser and defrauding a Puerto Rico Municipality to the tune of $7.1 million in taxpayer dollars.
The SEC alleges in its enforcement action that Eugenio Garcia Jimenez, Jr., in 2016, represented to municipal officials that he could invest around $9 million of municipal monies with no principal risk, and generate annual returns of approximately 10%. The SEC further claims that the municipality intended to utilize these investment returns to fund municipal projects. To carry out the fraud, the SEC contends that Garcia falsified documents and, instead of creating an investment plan to generate the promised returns, bought U.S. Treasury notes, secured a margin loan to pledge them as collateral and, throughout the next half-year, stole $7.1 million by transferring funds to himself, his associates and controlled entities.
The SEC charged Jimenez, Jr. with various violations of the anti-fraud provisions of the Federal Securities Laws, including those under the Investment Advisers Act of 1940, and is seeking injunctive relief, disgorgement of illegal gains, interest and civil penalties.
Investment adviser fraud, including misappropriation of funds, has historically been aggressively prosecuted by the SEC – this case, from an enforcement perspective, is thus unremarkable. However, as an increasing number of FINRA registered representatives leave broker-dealers and seek greener pastures as state or SEC registered investment advisers, we will continue to see zealous enforcement by the SEC in this space.
If you have received an SEC Subpoena, it is critical you hire an experienced SEC defense lawyer to protect your interests from the beginning of the process. SEC defense lawyer David Chase, who formerly worked for the SEC, understands how the SEC investigates and prosecutes, thereby providing his clients with an invaluable edge. Representing individuals nationwide, SEC defense lawyer David Chase, based in South Florida, is available for a confidential, no cost consultation: toll-free at: 800-760-0912, or email at firstname.lastname@example.org.