U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22380 / May 30, 2012
SEC v. Richard DeMaria, Civil Action No. 1:12-cv-04145 (N.D. Ill.) (Judge Kennelly)
The Securities and Exchange Commission charged Chicago-area resident Richard DeMaria yesterday with fraud, alleging that he operated a prime bank scheme that defrauded at least thirteen investors out of approximately $4.3 million.
The SEC's complaint, filed on May 29, 2012 in the U.S. District Court for the Northern District of Illinois, alleges that DeMaria enticed his investor victims to invest money with him to purchase interests in a financial instrument for the purpose of generating a profit. Instead of purchasing any financial instruments, DeMaria misappropriated virtually all of the victims' money for his own personal use.
The SEC alleges that DeMaria never acquired any financial instruments, which is typical in prime bank schemes. When investors sought the return of their investments, DeMaria lulled investors with promises that a deal to acquire a financial instrument was imminent. These promises were false.
According to the SEC's complaint, DeMaria misappropriated at least $3.8 million of the investor funds. He used investor funds for, among other things, his personal use and to fund his other business ventures. For example, DeMaria used over $2 million to fund his real estate business. He also spent over $90,000 of investors' money at a Chicago-area dealership specializing in the sale of sports cars. DeMaria also used investor funds for travel and expensive meals.
The SEC complaint alleges violations of Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 thereunder by DeMaria. As part of this action, the SEC seeks an order of permanent injunction against DeMaria as well as the payment of disgorgement of ill-gotten gains, prejudgment interest and civil penalties.
The staff's investigation is continuing.