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Regulation and Compliance > Federal Regulation > SEC

Ponzi Schemers Took $100M, Threw Party in Vegas: SEC

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The Securities and Exchange Commission filed charges and obtained an asset freeze against the individuals and companies behind a $102 million Ponzi scheme that bilked investors throughout the U.S.

According to the SEC’s complaint, the defendants defrauded more than 600 investors through sales of securities in issuers they controlled, including First Nationle Solution LLC, United RL Capital Services, and Percipience Global Corp.

They misappropriated the proceeds for numerous purposes, the SEC says. According to the complaint, one defendant, Perry Santillo, used some of the money to commission the writing of a song calling him “King Perry” and boasting about his $10,000 suits. The song was played at a party he threw for himself in Las Vegas.

First Nationle — yes, that’s the proper spelling — purports to be a socially conscious investment firm that helps clients achieve “financial and stability to your family’s security” by investing in affordable housing, according to its website. United RL Capital purports to help physicians finance the development of their own clinical labs.

The complaint alleges that investors were told that their funds would be used for the companies and some were guaranteed dividends or double-digit returns. However, according to the complaint, the defendants spent at least $20 million to enrich themselves, paid $38.5 million in Ponzi-like payments, and transferred much of the remainder in transactions that appear unrelated to the issuers’ purported businesses.

The complaint charges Santillo, of Rochester, New York; Christopher Parris, also of Rochester; Paul LaRocco, of Ocala, Florida; John Piccarreto, of San Antonio; and Thomas Brenner, of Orville, Ohio, along with the three companies.

“We allege that the defendants engaged in a massive fraud and swindled investors to line their pockets with ill-gotten gains,” Marc Berger, director of the SEC’s New York Office, said in a statement. “Investors should be on high alert whenever they are promised guaranteed returns.”

According to the SEC, Santillo and Parris would buy or take over books of business of retiring investment professionals from around the country.

Then Santillo and Parris, or local salespeople, including Piccarreto, LaRocco and Brenner, persuade these newly acquired clients to withdraw their savings from traditional investments and invest in issuers controlled by Santillo, Parris or their associates, including First Nationle, Percipience and United RL. The bulk of the more than $102 million raised in this fraud was purportedly raised for these three issuers.

The SEC describes one example, in which Piccarreto met with an investor from Austin, Texas, in February 2015.

“Because the investor suffers from dementia and was nearly 80 years old at the time, his daughter attended the meeting as well,” the SEC complaint states. “Piccarreto convinced the elderly investor to put $250,000 in Percipience, describing it as a real estate investment.”

On March 5, 2015, that money was deposited into Percipience’s bank account, then promptly transferred through affiliate bank accounts — from which Piccarreto misappropriated $21,500 — and through First Nationle’s bank account — from which Santillo misappropriated $172,800.

More than two years later, after the investor’s daughter expressed concern about his investments to Piccarreto, Piccarreto falsely wrote in an email, “I know this is scary for you and you are just looking out for dad but I promise you I will not let anything happen to any of the money,” according to the SEC.

The SEC says that the defendants knew they were lying to investors and stealing their money. And, the SEC adds, this investor has never received any money back from his investment in Percipience.

The SEC’s complaint, filed in federal district court in Manhattan, charges Santillo, Parris, LaRocco, Piccarreto, Brenner and the three issuers with violating the antifraud provisions of the federal securities laws.

The court granted the SEC’s request for an asset freeze and a temporary restraining order. The court will hold a hearing in 10 days concerning the asset freeze and will consider ordering a preliminary injunction.

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