SEC Cases: NY Town Accused of Municipal Securities Fraud, Jay Peak Owner Accused in $200M Immigrant Visa Fraud Arrives at Tentative Settlement, and Financial Judgment is Reached in $110M Investor Fraud Against Inofin

SEC Files Fraud Charges Against Oyster Bay, NY
The US Securities and Exchange Commission has filed municipal securities fraud charges against the New York City of Oyster Bay along with John Venditto, who was a former supervisor of the town. According to the regulator, the Long Island Town and Venditto defrauded investors through 26 municipal securities offerings from 8/2010 to 12/15. A parallel criminal action has been brought against the ex-town supervisor.

The regulator’s complaint claims Oyster Bay and Venditto hid a number of side deals with a businessman who ran concession stands and restaurants at local facilities. Part of the deals included agreeing to “indirectly guarantee” a number of private loans totaling over $20M to this vendor. “Gifts, bribes, kickbacks, and political support” also were allegedly involved.

The Commission contends that the indirect loan guarantees should have been disclosed in relation to the securities offerings because they were “material” for the possible impact they could have on the town’s financial health. For example, Oyster Bay could have ended up having to issue $16M without much notice. That would have been 16% of its operating funds. Investors were not aware this was a possibility.

In the SEC case against him, the regulator wants to bar Venditto from future involvement in any bond sales. The regulator also wants him and Oyster Bay to pay monetary penalties.

In the criminal securities fraud case against Venditto, prosecutors are charging him with 21 criminal charges, including wire fraud and securities fraud. Venditto had faced another criminal case for corruption last year that allegedly involved the same vendor.

Jay Peak Ski Resort Owner Settles Regulator’s Case
Ariel Quiros, the Florida businessman accused of a $200M immigrant visa fraud, has reportedly arrived at a tentative settlement with the US Securities and Exchange Commission. Details of the deal, which still have to garner SEC commissioner approval, have not been disclosed. Financial penalties and disgorgement, however, are reportedly part of the agreement.

Quiros, along with business partner Bill Stenger, are accused of misusing the funds of foreign investors who were taking part in the EB-5 immigrant investor visa program in the hopes of gaining permanent residency with the US. Part of that included investing in construction projects involving Jay Peak and other properties.

However, rather than using all of investors’ money for the supposedly intended purposes, Quiros is accused of taking over $50M of their funds. Already, numerous civil lawsuits have been brought over the scam.

Although a criminal probe into the matter has been opened, no criminal charges have been filed.

Bankruptcy Trustee for Massachusetts Company Settles $110M Promissory Note Case
A final judgment has been reached in the Commission’s enforcement action against a now bankrupt Inofim. The subprime auto-financing company’s bankruptcy trustee consented to a permanent injunction as part of the settlement but did not deny or admit to the allegations.

According to the regulator’s 2011 complaint, Inofin and a number of its executives illegally raised at least $100M from hundreds of retail investors through material misrepresentations and by selling unregistered promissory notes. Earlier this year, two of the executives accused of involvement in the scam, ex-Inofin President Michael Cuomo and former CEO Kevin Mann, pleaded guilty to “conspiracy to commit mail fraud and wire fraud.” Both are serving prison terms and must pay more than $10M in restitution.

SEC Complaint in the Oyster Bay Case (PDF)

The SEC Complaint in the Jay Peak Case (PDF)

Court Enters Final Judgment Against Massachusetts Company Responsible for Large Scale Securities Fraud, SEC, November 20, 2017

More Blog Posts:
Investment Adviser Faces Charges That He Bilked Older Investors of $5.2M, Stockbroker Fraud Blog, November 21, 2017
Singer Financial Corp. Accused of Making Illegal Securities Offering of Promissory Notes to Unsophisticated Investors, Stockbroker Fraud Blog, November 15, 2017

Credit Suisse Resolves NY Regulator’s Forex Rigging Probe for $135M, Institutional Investor Securities Blog, November 15, 2017