$23M Ponzi Plot Targeted Hispanic-Americans: SEC

$23M Ponzi Plot Targeted Hispanic-Americans: SEC - 4/14/2009

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$23M Ponzi Plot Targeted Hispanic-Americans: SEC
Jessica Dye

Securities Law 360. April 14, 2009
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EXCERPT: An investment promoter and her firm targeted the Hispanic-American community by peddling supposed no-risk, high-yield returns on unregistered securities in a Ponzi scheme that bilked at least 150 investors in seven states out of $23 million, the U.S. Securities and Exchange Commission alleged in a fraud suit filed Tuesday. The SEC filed the suit in the U.S. District Court for the Central District of California, accusing Celia A. Flores and her company, California-based Maximum Return Investments Inc., of securities fraud and misappropriating funds from dozens of investors. According to the suit, Flores promised investors returns as high as 25 percent within 30 to 45 days. The suit is seeking disgorgement of any profits from the alleged scheme, as well as a permanent injunction against committing future fraud. According to the regulator, Flores collected an estimated $23 million in funds between late 2006 and February 2008 by offering unregistered securities with a 100 percent safety guarantee, primarily through word-of-mouth recommendations, testimonials and referrals targeting Hispanic-Americans. Flores told investors that the unregistered securities — primarily sold as investment contracts or notes — were confidential, high-yield investment opportunities in real estate, oil, and silver and gold exploration, the suit claims. The promoter also assured investors that their funds would be placed in a guaranteed MRI bank account and distributed pamphlets to investors in which she outlined payment scenarios that falsely promised monthly returns of $25,000 on a $100,000 investment, the complaint alleges. Instead, she spent $13 million of investors' money to pay off the promised returns on other investments, in a classic Ponzi scheme, according to the SEC. […] Only $5.6 million of investors' money was actually invested, primarily in start-up companies and other high-risk ventures that failed to pay any returns on the MRI money, according to the suit.

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