SEC Bars Phony Advisor Accused of 'Ponzi-Like' Scheme
The CEO, who had no securities licenses, misappropriated $1.8 million and misled investors, the SEC alleges.
The Securities and Exchange Commission last week barred a Florida man from acting as an advisor or broker after he allegedly operated a Ponzi-like program and raised at least $6.6 million from investors despite having no securities license.
The SEC filed a civil complaint in U.S. district court in Florida in September against Rafael Alberto Vargas Gonzalez, also known as Rafael Vargas, 42, who had acted as CEO of Empirex Capital LLC in Miami since forming the company in 2018, the commission noted in an order Thursday.
Vargas was never registered with the SEC or any state securities regulator, nor did he ever hold any securities licenses, and Empirex’s investment offerings were never registered with the agency, according to the order, which bars Vargas from association with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent or nationally recognized statistical rating organization.
The complaint alleged, among other points, that from July 2018 through at least March 2023, Vargas and Empirex raised at least $6.6 million from 162 or more investors in the U.S. and abroad “by making repeated material misrepresentations and receiving compensation for making investment advisement decisions for those investors,” the SEC wrote.
“As alleged, the misrepresentations concerned Vargas’s and Empirex’s use of assets obtained from investors, the profitability of Empirex’s trading activities, Empirex’s assets under management, Vargas’s and Empirex’s qualifications to manage investors’ assets and their backgrounds, and the risks of investing with Empirex.
“The complaint further alleged Vargas misappropriated approximately $1.8 million and misled investors as to the profitability of their investments by making and facilitating Ponzi-like payments to the investors to mask Empirex’s failure to generate sufficient profits in trading investors’ assets,” the SEC said.
The court in December permanently enjoined Vargas by consent from certain future violations of the Securities Act of 1933 and of the Investment Advisers Act of 1940, the SEC noted.
The SEC, through its order under the Advisers Act, agreed to sanctions in a settlement offer presented by Vargas, who neither admitted nor denied the allegations.
Photo: Diego M. Radzinschi/ALM