SEC Charges Bogus Brokers With Fraud

Bongiorno obtained at least $30,000 from investors “by means of misrepresentations and omissions,” the complaint said, noting he “failed to disclose that he intended to and did use investor funds for other things than investments in PQEFF.”

For their roles as investor solicitors, PQEFF paid Arthur and Bongiorno received transaction-based compensation or commissions averaging 39% of investor proceeds, according to the SEC.

To find solicitors to hire, Bongiorno posted various Craigslist advertisements including one, posted on or around Oct. 17, 2017, recruiting “seasoned closers” with “experience in private equity,” the complaint said.

“By using fictitious names, Arthur and Bongiorno knowingly or with severe recklessness made material misrepresentations and omissions to USLG and investors,” the complaint stated. “A reasonable investor would have considered the misstatements and omissions about their true identities important in deciding whether to invest,” it noted.

The complaint charged Arthur and Bongiorno with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 and the broker-dealer registration provisions of Section 15(a)(1) of the Exchange Act.

The SEC is looking to permanently restrain and enjoin the defendants from continued Securities Act violations and from continuing to solicit anybody to buy or sell any additional securities. It is also looking for the defendants to pay an unspecified civil penalty and to “disgorge all ill-gotten gains or unjust enrichment derived” from their fraud, along with prejudgment interest.

The SEC’s investigation was conducted by James Thibodeau and Laurie Abbott and was supervised by Daniel Wadley, regional director of the Salt Lake Regional Office. The litigation will be led by David Whipple, the SEC said.

— Check out SEC Releases Updated List of Fake Regulators, Deceptive Firms on ThinkAdvisor.