The Securities and Exchange Commission announced today that a U.S. District Judge found two Miami companies and their three officers liable for violating the anti-fraud provisions of the federal securities laws stemming from a 13-year fraud in which they siphoned up to 85 percent of investors’ initial contributions for undisclosed commissions and other fees.
A 46-page order from the Honorable Jose Martinez of the Southern District of Florida found U.S. Pension Trust Corp., U.S. College Trust Corp., Iliana Maceiras, Leonardo Maceiras Jr., and Nildo Verdeja liable for violating Sections 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and Section 17(a) of the Securities Act of 1933 in connection with the scheme. The opinion following a five-day bench trial in January also found the companies liable for acting as unregistered broker-dealers, and the individuals liable for aiding and abetting those violations. The judge ordered the companies to disgorge $62.6 million in investor contributions they fraudulently raised between 1995 and 2008, and pay a $50 million civil penalty. The opinion ordered each of the individuals to pay disgorgement of between $674,567 and $1,093,364, representing their salaries during that time, and pay a $200,000 civil penalty.
According to the Court’s findings, U.S. Pension Trust and U.S. College Trust, which the three individuals operated out of Miami, solicited investments from mostly foreign investors in various multi-year investment plans starting in 1995. The plans put funds into a combination of U.S. mutual funds and insurance products. The Court found that both in written materials provided to investors and in conversations sales agents held with investors, the companies, at the direction of the two Maceirases and Verdeja, intentionally omitted disclosing numerous commissions and fees, including up to 85 percent of first-year contributions in some plans.
The Court also found the companies and the individuals misrepresented to investors that their products were registered and regulated by the Commission, the Federal Reserve Bank, and the Office of the Comptroller of the Currency. Finally, the Court found the defendants acted as broker-dealers in selling their products, without registering with the Commission.
In addition to the disgorgement and penalties, the Court entered permanent injunctions against both companies and all three individuals against future violations of the aforementioned securities law provisions.