South Florida Investment Manager Facing Fraud Charges
A South Florida investment manager is facing fraud charges for making false claims on his investors about his investment track record and providing bogus account statements that reflected fictitious profits.
In the complaint filed in the U.S. District Court for the Southern District of Florida, the US SEC alleges that since 2005, George Elia and International Consultants & Investment Group Ltd. Corp., pulled in at least $11 million from investors by falsely claiming annual returns as high as 26%, and that Elia transferred more than $2.5 million of investor funds to two entities he controlled, Elia Realty, Inc., and 212 Entertainment Club, Inc.
Elia, age 67, and until recently a resident of Oakland Park, Florida, allegedly told investors that he had extensive experience in day trading stocks and exchange-traded funds, but his trading resulted in losses or only marginal gains, and the quarterly account statements he sent to clients overstated their returns.
According to the SEC’s complaint, Elia typically met and pitched prospective investors over meals at expensive restaurants in and around Fort Lauderdale. The SEC said his clients typically came to him through word-of-mouth referrals among friends and relatives. A significant number of the victims of his scheme were members of the gay community in Wilton Manors, Florida.
“Elia’s blatant fraud and cruel deceptions have wrecked the lives of investors and their families,” said Eric I. Bustillo, Regional Director of the SEC’s Miami Regional Office.
“This is a sad lesson that investors must always be skeptical of claims of high and steady investment returns, even when the manager is recommended by trusted friends or members of one’s own community.”
In a parallel criminal case, the U.S. Attorney for the Southern District of Florida announced that Elia was indicted on April 5 on one count of wire fraud.
The SEC alleges that Elia and ICIG operated through an informal “Investor Funding Club” and through funds including Vision Equities Fund II, LLC and Vision Equities Fund IV, LLC. It alleges that Elia sent one investor a statement for the first three quarters of 2009, showing returns of 3.48%, 3.48%, and 3.52% respectively.
The SEC alleges the statement was false and misleading because the returns exceeded Elia’s trading gains for the period. In at least one instance, the SEC alleges Elia reassured an investor by showing him falsified statements that grossly overstated account balances.
The SEC’s complaint charges that Elia and ICIG violated antifraud provisions of U.S. securities laws and that Elia aided and abetted violations by the firms. The SEC is seeking permanent injunctions against Elia and ICIG, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties. The complaint also named Elia Realty, Inc. and 212 Club Entertainment, Inc. as relief defendants.
SEC Senior Investigative Counsel Robert H. Murphy and Staff Accountant Timothy J. Galdencio conducted the SEC’s investigation under the supervision of Assistant Regional Director Eric R. Busto in the Miami Regional Office. Edward D. McCutcheon will lead the SEC’s litigation efforts.
The SEC’s investigation is continuing.