U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22319 / April 6, 2011
SEC v. George Elia and International Consultants & Investment Group Ltd. Corp. as Defendants, and 212 Entertainment Club, Inc. and Elia Realty, Inc., as Relief Defendants (United States District Court for the Southern District of Florida, Civil Action No. 0:12-cv-60616)
SEC CHARGES SOUTH FLORIDA MAN WITH FRAUD IN PHONY STOCK-TRADING FUNDS
The Securities and Exchange Commission today charged that a South Florida investment manager defrauded investors by making with false claims about his investment track record and providing bogus account statements that reflected fictitious profits.
In the complaint filed in the U.S. District Court for the Southern District of Florida, the SEC alleges that since 2005, George Elia and International Consultants & Investment Group Ltd. Corp., pulled in at least $11 million from investors by falsely claiming annual returns as high as 26%, and that Elia transferred more than $2.5 million of investor funds to two entities he controlled, Elia Realty, Inc., and 212 Entertainment Club, Inc.
Elia, age 67, and until recently a resident of Oakland Park, Florida, told investors that he had extensive experience in day trading stocks and exchange-traded funds, but his trading resulted in losses or only marginal gains, and the quarterly account statements he sent to clients overstated their returns, the SEC alleged.
According to the SEC’s complaint, Elia typically met and pitched prospective investors over meals at expensive restaurants in and around Fort Lauderdale. The SEC said his clients typically came to him through word-of-mouth referrals among friends and relatives. A significant number of the victims of his scheme were members of the gay community in Wilton Manors, Florida.
The SEC alleges that Elia and ICIG operated through an informal “Investor Funding Club” and through funds including Vision Equities Fund II, LLC and Vision Equities Fund IV, LLC. It alleges that Elia sent one investor a statement for the first three quarters of 2009, showing returns of 3.48%, 3.48%, and 3.52% respectively. The SEC alleges the statement was false and misleading because the returns exceeded Elia’s trading gains for the period. In at least one instance, the SEC alleges Elia reassured an investor by showing him falsified statements that grossly overstated account balances.
The Commission’s complaint charges Elia and ICIG with violations of Section 17(a)(1), (2) and (3) of the Securities Act of 1933 (“Securities Act”); Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5(a), (b), and (c) thereunder; and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-8 thereunder. The Commission’s complaint alleges in the alternative that Elia aided and abetted violations of Section 10(b) and Rule 10b-5(b) by ICIG, International Consultants and Enterprises, Inc., Vision Equities Fund II, and Vision Equities Fund IV, and that Elia aided and abetted violations by ICIG of Sections 206(1), 206(2), 206(4)-8 and Rule 206(4)-8 of the Advisers Act. The Commission is seeking permanent injunctions against Elia and ICIG for violating or aiding and abetting the violations of the above provisions of the securities laws, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties. The complaint also names Elia Realty, Inc. and 212 Club Entertainment, Inc. as relief defendants seeking disgorgement and pre-judgment interest.
The Commission thanks the U.S. Attorney’s Office for the Southern District of Florida and the Federal Bureau of Investigation for their assistance in this matter.
The Commission’s investigation is continuing.