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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22842 / October 11, 2013

Securities and Exchange Commission v. Michael R. Enea, Civil Action No. 2:13-cv-01151 (E.D. Wisc., filed October 10, 2013)

SEC Charges Menomonee Falls, Wisconsin Resident with Operating a Ponzi Scheme

On October 10, 2013, the Securities and Exchange Commission charged Michael R. Enea of Menomonee Falls, Wisconsin with violations of the federal securities laws for conducting fraudulent, unregistered offerings of securities and misappropriating investor funds to pay his personal expenses.

The Commission's complaint alleged that, from July 2006 through May 2013, Enea operated a Ponzi scheme through the fraudulent and unregistered offer and sale of securities to 18 investors totaling approximately $2.1 million. Enea represented to the investors that he would combine his funds with funds contributed by each investor and use the money to invest in a "credit card portfolio." Credit card portfolios, according to Enea, consisted of a group of retail merchants who pay fees to a third party credit card processor each time one of the merchants' customers makes a credit card transaction. Enea told investors that by investing in credit card portfolios the investor would receive monthly or quarterly payments. The payments to investors were purportedly generated by the payment of the transaction fees by the merchants to the credit card processors. In reality, Enea never purchased any credit card portfolios and instead used approximately $1.35 million of the investors' funds to make the monthly or quarterly payments to prior investors. Enea used the remaining approximately $760,000 he raised from investors to pay his personal and business expenses. Enea never told investors that he used their funds to make payments to previous investors or to pay his personal and business expenses. The complaint also alleged that Enea acted as an unregistered broker.

As a result of his conduct, the Commission's complaint charged Enea with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Enea has agreed to settle the charges against him. Specifically, Enea consented to the entry of a final judgment that, without admitting or denying the Commission's allegations against him, permanently enjoins him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and requires him to pay disgorgement of $763,803, the amount of his ill-gotten gains, plus prejudgment interest of $79,317.

SEC Complaint

 

http://www.sec.gov/litigation/litreleases/2013/lr22842.htm


Modified: 10/11/2013