The Securities and Exchange Commission said Tuesday that it obtained a court order halting an ongoing $30 million Ponzi scheme orchestrated by a purported cryptocurrency business backed by diamonds targeting more than 300 investors in the U.S. and Canada.
The SEC complaint unsealed Monday charges South Florida-based Argyle Coin LLC and its principal, Jose Angel Aman, with using investor funds to run a Ponzi scheme.
According to the SEC compliant, from no later than May 2014, the defendants have raised about $30 million from approximately 300 investors through the sale of securities in the form of promissory notes and investment contracts in Argyle Coin and in two other companies Aman owns, Natural Diamonds Investment Co. and Eagle Financial Diamond Group.
“To lure investors, the defendants have knowingly or recklessly materially misrepresented how they would use investor funds and the safety of the investments,” the complaint states.
Aman engaged in unregistered offerings of securities in Natural Diamonds and Eagle as early as May 2014, falsely promising investors that the companies would invest in whole diamonds to cut down and sell for huge profits.
Instead, according to the complaint, Aman, Natural Diamonds, Eagle, and Argyle Coin misused or misappropriated more than $10 million of investor funds to pay other investors their purported returns and for Aman’s personal expenses, including rent on his home, purchases of horses, and riding lessons for his son.
On May 20, Judge Robin L. Rosenberg of the U.S. District Court for the Southern District of Florida granted the SEC’s request for a temporary restraining order and temporary asset freeze against Aman, Argyle Coin and other companies charged by the SEC as relief defendants. The court also appointed Jeffrey D. Schneider as a receiver over Argyle Coin.
As alleged, the fraud is a continuation of a scheme Aman orchestrated with Natural Diamonds and Eagle.
According to the complaint, Aman was assisted by Harold Seigel and Jonathan H. Seigel, who also have interests in Natural Diamonds and Eagle. According to the complaint, in October 2017, Aman and Jonathan H. Seigel continued the scheme by luring investors to invest in Argyle Coin, falsely claiming the cryptocurrency investment was risk-free because it was backed by fancy colored diamonds, and promising to use investor funds to develop the cryptocurrency business.
H. Seigel, vice president of Natural Diamonds and president of Eagle, has hosted a weekly radio show since 2010 called “The World Financial Report.” The show is now a weekly online podcast by the same name in which Seigel touts investment opportunities.
The SEC’s complaint seeks disgorgement of allegedly ill-gotten gains and prejudgment interest from Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel and the relief defendants, and financial penalties against Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel and Jonathan H. Seigel.
— Check out SEC Releases Digital Assets Framework on ThinkAdvisor.