SEC Doubles Down on Busting Up Affinity Fraud Ponzi Schemes
The Securities and Exchange Commission (SEC) has stepped up its legal war on affinity fraud with charges against the alleged operators of a Ponzi scheme targeting members of the Hispanic community in the southwestern United States.
On Thursday, the SEC announced charges against Aras Investment Business Group and its CEO, Armando Gutierrez Rosas, along with four associates.
The SEC Alleges Affinity Fraud via a Ponzi Scheme
According to the SEC’s announcement, Rosas and associates went about raising at least $15 million from US-based retail investors. The pretext was to invest in mining and real estate ventures in Mexico. Rosas allegedly promised these would provide returns of up to ten percent.
The SEC filed its complaint in federal court in the Western District of Texas. The complaint charges Rosas with running a classic Ponzi scheme. Rather than put the money to work as promised, the regulator claims, Rosas used the funds for private expenses. Among them, a $2.5 million mansion.
Besides the elements of a classic Ponzi scheme, where funds from some investors go to satiate others in the scheme and buy time for the orchestrator to raise even more money, the case stands out (if indeed the allegations are true) as an example of affinity fraud.
Learn more about recent guidance from the SEC as the agency steps up its efforts against fraud and other malfeasance.
Authorities Double Down on Prosecution of Affinity Fraud
US regulators have been especially tough on affinity fraud in recent months. In May, the Commodity Futures Trading Commission (CFTC) said it took action against five people accused of defrauding 170 investors through a California-based Ponzi scheme.
This latter was was a digital asset commodity trading scheme. It, too, targeted members of the Spanish-speaking population. Many of whom knew each other and thought that the scheme’s masterminds had their best interests at heart.
Earlier this very week, the SEC announced charges against a California resident for an alleged Ponzi scheme. One that solicited investments from the Tongan communities of America, Australia, and New Zealand.
This $11.8 million swindle was so serious that the Justice Department has pursued criminal charges separately from the SEC’s civil action.
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