SEC Fraud Cases: ‘Next Google’ IPO; China Market Manipulation; Florida Ponzi Play

Further, the SEC complaint says that beginning in late 2010, the”defendants and others opened 26 brokerage accounts at E*Trade Financial,” depositing more than $60 million into those accounts over four months, despite that the size of the deposits to the accounts, and the volume of their trading, “was well beyond what [the defendants’] self-described means (as set out on their E*Trade Account applications) would indicate was possible for them.” 

Using those accounts, through the same computer network and in some instances “even the same computer,” the defendants allegedly “bought and sold millions of shares of AutoChina stock from October 2010 through February 2012,” the complaint said. “They traded only in AutoChina stock.”

The scheme worked; average daily trading balance of AUTC rose from about 18,000 shares per day in that time period to 139,000 shares per day in the period, and the SEC says that nearly 70% of that trading volume came from the defendants in the case.

The SEC said it has been assisted in its ongoing investigation by FINRA and the Hong Kong Securities and Futures Commission.

Florida Fraud

In the third fraud case, on April 6 the SEC charged George Elia, who the commission called an “investment manager” who most recently lived in Oakland Park, Fla., but who the SEC now believes to be living in Cyprus, and his firm, International Consultants & Investment Group Ltd. Corp., with fraudulently raising $11 million from investors by “falsely claiming annual returns as high as 26%.” Elia is accused of transferring more than $2.5 million of those funds to two other entities he controlled, Elia Realty, Inc., and 212 Entertainment Club, Inc.

The SEC said Elia told investors that he had “extensive experience” in day trading stocks and ETFs, but his trading “resulted in losses or only marginal gains, and the quarterly account statements he sent to clients overstated their returns.”

According to the SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, Elia typically pitched prospective investors over meals at expensive restaurants in and around Fort Lauderdale, Fla. The SEC said his clients typically came to him through word-of-mouth referrals among friends and relatives, and that a “significant number of the victims of his scheme were members of the gay community in Wilton Manors, Fla.”

In a parallel criminal case, the U.S. Attorney for the Southern District of Florida announced that Elia was indicted on April 5 on one count of wire fraud.

The SEC’s complaint charges that Elia and ICIG violated antifraud provisions of U.S. securities laws and that Elia aided and abetted violations by the firms.  As part of the ongoing investigation, the SEC is seeking permanent injunctions against Elia and ICIG, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties.