The Securities and Exchange Commission (SEC) charged 17 people for their alleged roles in a $300 million Ponzi scheme that targeted more than 40,000 predominantly Latino investors, according to a complaint filed in federal court in Houston, Texas, on Thursday.
The complaint follows the SEC’s emergency action in September 2022 that halted the company accused of carrying out the scheme, CryptoFX, and charged the two alleged main actors involved, Mauricio Chavez and Giorgio Benvenuto.
Since 2022, the SEC has continued the investigation to identify more individuals involved in the alleged scheme.
“We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from ‘risk free’ and ‘guaranteed’ crypto and foreign exchange investments,” Gurbir Grewal, director of the SEC’s division of enforcement, said in a statement.
“In the end, the only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across 10 states and two foreign countries,” Grewal added.
According to the complaint, filed in the Southern District of Texas, the 17 defendants acted as “leaders” of the CryptoFX network. They allegedly raised $300 million from predominantly Latino investors and promised returns of 15 to 100 percent on their investments.
The SEC alleges that the defendants mostly did not use the funds for trading purposes, as they claimed to investors. The defendants instead used the funds to pay off supposed returns to other investors, to pay themselves commissions and bonuses and to “fund their own lifestyles,” according to the SEC’s complaint.
Even after the court ordered the company to stop the alleged CryptoFX scheme, two defendants, Gabriel and Dulce Ochoa, continued trying to solicit investments, according to the complaint. Gabriel Ochoa is also accused of instructing two investors to rescind their complaints to the SEC to recover their investments.
The SEC charged Gabriel and Dulce Ochoa, Maria Saravia, Gloria Castaneda, Ismael Zarco Sanchez and Roberto Zavala with violating the anti-fraud, securities-registration and broker-registration provisions of the federal securities laws. Gabriel Ochoa is also charged with violating whistleblower protection provisions.
The complaint charged Gabriel Arguelles, Hector Aquino, Orlin Wilifredo Turcios Castro, Carmen De La Cruz, Elizabeth Escoto, Reyna Guiffaro, Marco Antonio Lemus, Juan Puac, Luis Serrano, Julio Taffinder and Claudia Velazquez with violating the securities-registration and broker-registration provisions.
The SEC is seeking permanent injunctions, disgorgement with prejudgment interest and civil penalties against each defendant.
Two defendants, Serrano and Taffinder, already agreed to final judgments subject to court approval, without admitting or denying the actual allegations, according to the SEC. They agreed to pay more than $68,000 total.