SEC Charges Florida Payday Lender and CEO with Affinity Fraud Targeting the Venezuelan-American Community
- Written by Newsfile
Washington, D.C.--(Newsfile Corp. - September 27, 2021) - The Securities and Exchange Commission today announced charges against Sky Group USA LLC, a payday loan company based in Miami, and its CEO, Efrain Betancourt, Jr., for fraudulently raising at least $66 million through the sale of promissory notes to more than 500 retail investors, including members of the South Florida Venezuelan-American community.
According to the SEC's complaint, filed in the United States District Court for the Southern District of Florida, Sky Group and Betancourt falsely told investors that Sky Group would use investors' money solely to make payday loans and cover the costs of such loans, when, in reality, Betancourt misappropriated at least $2.9 million for personal use – including for his lavish wedding at a chateau on the French Riviera, vacations to Disney resorts and the Caribbean, costs associated with the purchase of a luxury Miami condominium, and service on his personal Piper airplane – and transferred at least another $3.6 million to friends and family, including his ex-wife, Angelica Betancourt, and to EEB Capital Group LLC, an entity whose bank accounts Betancourt and his current wife control. Sky Group and Betancourt also allegedly used at least $19.2 million of investors' money to make Ponzi-like payments to other investors. Finally, the SEC's complaint alleges that Sky Group and Betancourt misled investors by promising annual returns as high as 120% and representing that Sky Group's business was profitable, even though Sky Group did not generate sufficient revenue to cover principal and interest payments due to investors.
"As alleged in our complaint, Sky Group and Betancourt lured unsuspecting investors, including many members of the South Florida Venezuelan-American community, with false claims and promises of high-return, low-risk investments," said Eric I. Bustillo, Director of the SEC's Miami Regional Office. "We continue to caution investors to be wary of any investment that promises returns that are too good to be true."
The SEC's complaint charges Sky Group and Betancourt with violations of the registration and antifraud provisions of the federal securities laws and additionally charges Betancourt with acting as an unregistered broker. The complaint also names as relief defendants Angelica Betancourt and EEB Capital Group LLC in connection with their illicit receipt of investor funds. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties from each of the defendants; an officer and director bar against Betancourt; and disgorgement with prejudgment interest from the relief defendants.
Many fraudsters take advantage of the trust that having something in common creates, such as a common nationality. The SEC's Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force have issued an Investor Alert[1] with tips on how investors should avoid investment decisions based solely on common ties with someone recommending or selling the investment.
The SEC's continuing investigation is being conducted by Alexander Charap, Cecilia Danger and Crystal Ivory in the Miami Regional Office and supervised by Jessica M. Weissman and Glenn S. Gordon. The SEC's litigation is being led by Robert K. Levenson and supervised by Andrew Schiff. The SEC appreciates the assistance of the Florida Office of Financial Regulation.
References
- ^ Investor Alert (www.newsfilecorp.com)