SEC Obtains Asset Freeze Against Company in Turks and Caicos Islands Behind South Florida-Based Ponzi Scheme
The Securities and Exchange Commission today announced an emergency asset freeze against a company located in Turks and Caicos Islands in connection with its operation of a South Florida-based Ponzi scheme.
The SEC’s request for the emergency asset freeze against Abatement Corp. Holding Company Limited was granted in the U.S. District Court for the Southern District of Florida last week. The SEC’s complaint alleged that Abatement Corp. and its now-deceased principal Joseph Laurer – who commonly used the name Dr. Josef V. Laurer – falsely promised investors safe, guaranteed returns while engaging in an offering fraud and Ponzi scheme from November 2004 until Laurer’s death on May 15, 2014.
The SEC’s complaint also names Laurer’s widow Brenda Davis and another Laurer-controlled company International Balanced Fund as relief defendants because they received investor funds.
“Unknowing investors were led to believe that Abatement Corp. and Laurer were watching out for their financial best interests when, in fact, they were callously stealing their hard-earned money,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.
The SEC’s complaint alleges that Laurer, through Abatement Corp., raised more than $4.6 million from approximately 50 investors residing primarily in South Florida. Laurer, who was a member of the City of Homestead’s General Employee Pension Board and president of the South Dade chapter of AARP, convinced investors to give him money through false claims that he would put their money into Abatement Corp.’s purported bond fund that invested in triple-A rated corporate and government bonds. Laurer also told investors that the fund would pay a guaranteed fixed return, with no risk to principal because of insurance from either or both the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation.
The SEC alleges that by at least 2007, Laurer was operating a full-fledged Ponzi scheme and putting virtually no new investor money into securities, instead using investor funds to pay returns to investors, fund investor withdrawals, and pay personal expenses. At the time of Laurer’s death, approximately $900,000 remained in Abatement Corp.’s bank account in the Turks and Caicos Islands, and another $82,000 remains in a domestic bank account held by International Balanced Fund. The SEC further alleges that Laurer used investor funds for the benefit of his wife, including paying premiums with investor funds on a half million dollar life insurance policy she received upon his death.
The court order issued on September 12 temporarily freezes the assets of Abatement Corp. and International Balanced Fund and sets a hearing for September 22. Davis agreed to a temporary freeze of certain assets of hers until November 6, pending a determination of the SEC’s claim against Davis for disgorgement. If the SEC and Davis have not resolved the claims against her or agreed to an extension of the temporary asset freeze by October 22, then the court will hold a hearing on the SEC’s motion against Davis on October 24.
The SEC’s complaint charges Abatement Corp. with violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to seeking an asset freeze, the SEC also seeks an order directing Abatement Corp. and the relief defendants to pay disgorgement with prejudgment interest and provide a sworn accounting of all proceeds received and an order directing repatriation of any funds held at any offshore bank or other financial institution not subject to the jurisdiction of the court.
The SEC’s investigation was conducted by Terence M. Tennant and Mark S. Dee under the supervision of Elisha L. Frank in the SEC’s Miami Regional Office. They were assisted by Anson Kwong, Debra E. Williamson, George Franceschini, Nicholas A. Monaco and John C. Mattimore of the Miami office’s examination program. The SEC’s litigation is being led by Andrew Schiff. The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the Turks and Caicos Islands Financial Services Commission.