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SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 21225 / September 28, 2009

Securities and Exchange Commission v. Maximum Return Investments, Inc. and Clelia A. Flores, Case No. CV 09-2536 ODW (C.D. Cal.)

SEC Obtains Default Judgment, Full Disgorgement, and Civil Penalties Against MRI and Flores For Ponzi Scheme Targeting Hispanic-Americans

A federal judge in Los Angeles, California, issued a default judgment against defendants Maximum Return Investments, Inc. ("MRI") and Clelia A. Flores in an action brought by the United States Securities and Exchange Commission ("SEC"). The SEC alleged that Flores and MRI perpetrated a $23 million Ponzi scheme that targeted the Hispanic-American community. In an amended judgment issued September 9, 2009, the Honorable Otis D. Wright II of the United States District Court for the Central District of California permanently enjoined MRI and Flores from future violations of the antifraud provisions of the securities laws, imposed civil penalties of $650,000 against MRI and $130,000 against Flores, and ordered MRI and Flores jointly to pay disgorgement of $10,355,778 plus prejudgment interest of $259,738.63.

The SEC filed its complaint against MRI and Flores on April 13, 2009. The complaint alleged that Flores and MRI misled investors by promising that their money would be used for "risk-free" investment programs in real estate, commodities, and bank instrument trading and promised returns of up to 25 percent within 30 to 45 days. The Commission alleged, however, that Flores and MRI used approximately $13 million from new investors to pay the principal and interest due to earlier investors. According to the complaint, Flores also misappropriated more than $3.5 million of investor funds for personal expenses, including $443,000 to purchase a home, and almost $1.5 million to finance MRI's operations, most of which was used to pay for a lavish party celebrating MRI's purported financial success. Only $5.6 million was invested in high-risk ventures and start-up companies that never paid MRI any returns. MRI and Flores did not defend against the charges and the judgment was entered as a default.

For additional information, please see Litigation Release No. 20997 (April 13, 2009).

The SEC's Office of Investor Education and Assistance has previously issued an investor alert, available on the SEC's website, which provides tips on avoiding investment scams that target groups. See http://www.sec.gov/investor/pubs/affinity.htm.

 

 

http://www.sec.gov/litigation/litreleases/2009/lr21225.htm


Modified: 09/28/2009