SEC Halts Web-Based Scheme Defrauding Deaf Investors
FOR IMMEDIATE RELEASE
“Imperia's operators took proactive steps to conceal their identity by using an anonymous browser to host its website, communicating with all investors via e-mail, and taking their payments through off-shore PayPal-style bank accounts.”
Kenneth D. Israel
Director, SEC Salt Lake
Washington, D.C., Oct. 7, 2010 — The Securities and Exchange Commission has charged an Internet-based investment company with securities fraud for soliciting several million dollars from U.S. investors and promising them guaranteed returns of 1.2 percent per day while in reality siphoning the funds into foreign bank accounts and not paying a single penny back to investors.
The SEC has obtained an emergency court order freezing the assets of Imperia Invest IBC, which allegedly raised more than $7 million from approximately 14,000 investors worldwide. More than half the funds were collected from U.S. investors who are members of the Deaf community. Imperia offered the investment opportunity through its website by touting such lucrative examples as a $50 investment turning into a $134,000 return in six months. Imperia's website stated that investors could only access their profits by purchasing a Visa debit card from Imperia for a few hundred dollars. However, Imperia has no relationship with Visa and was using the Visa name without authorization. On its website, Imperia has listed fake business addresses in both the Bahamas and Vanuatu.
"Imperia's operators took proactive steps to conceal their identity by using an anonymous browser to host its website, communicating with all investors via e-mail, and taking their payments through off-shore PayPal-style bank accounts," said Kenneth D. Israel, Director of the SEC's Salt Lake Regional Office. "Investors were promised eye-popping amounts of money in return for a simple $50 or $100 investment, and Imperia has made numerous excuses on its website about why these returns haven't been paid."
The SEC's complaint filed in U.S. District Court in Utah on October 6 alleges that Imperia is defrauding investors by soliciting funds via the Internet to purchase Traded Endowment Policies (TEP) — the British term for viatical settlements. A TEP or viatical settlement involves the sale of an insurance policy by the policy owner before the policy matures, and policies are sold at a discount from face value in an amount greater than the current cash surrender value. Imperia's website stated that an initial $50 investment would allow the investor to obtain an $80,000 loan from an unnamed foreign bank that would be used by Imperia to purchase a TEP. Imperia would then trade the TEPs and pay the investor a guaranteed return of 1.2 percent per day. While Imperia contends that its experience with financial derivatives and bank securities allows it to offer trading in TEPs to the mass market, no TEP purchases or trading appear to be taking place.
According to the SEC's complaint, the majority of investor funds were paid to Imperia through three PayPal-type entities located in Costa Rica, Panama, and the British Virgin Islands. Once the funds have been received from investors, Imperia apparently funnels these amounts and additional investor funds to bank accounts located in Cyprus and New Zealand. Meanwhile, investors are not receiving any returns. For example, one investor who invested $150 with Imperia received account statements from Imperia showing he had earned more than $36 million within a two-year time frame. Another individual who invested $500 in July 2007 received statements showing his account was worth nearly $44 million as of May 2010. Meanwhile, Imperia has made a range of excuses on its website about why investors have not received the astronomical returns they were promised. It initially claimed it could start paying investors only when it had at least 10,000 investors — a number that already has been significantly exceeded. Then Imperia claimed it experienced computer server problems during its "relocation" from the Bahamas to Vanuatu. Other purported reasons for delays in paying out investment proceeds have been the need for additional time to verify the identities of investors, and compromise of Imperia's computer system by hackers.
The emergency court order obtained by the SEC late yesterday on an ex parte basis freezes Imperia's assets and, among other things, grants expedited discovery and prohibits Imperia from destroying evidence. In addition to the emergency relief for investors, the SEC is seeking an injunction against future violations of the antifraud and securities registration provisions of the federal securities laws, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
This matter was investigated by Jennifer Moore, Scott Frost and Matthew Himes of the SEC's Salt Lake Regional Office, and the litigation will be led by Daniel Wadley. The SEC appreciates the assistance of the State of Maine Office of Securities, the Securities Commission of the Bahamas, the Vanuatu Financial Services Commission, and the Cyprus Securities and Exchange Commission.
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For more information about this enforcement action, contact:
Kenneth D. Israel
Regional Director, SEC's Salt Lake Regional Office
Assistant Director, SEC's Salt Lake Regional Office