U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23307 / July 20, 2015
Securities and Exchange Commission v. Michael R. Enea, Civil Action No. 2:13-cv-01151 (E.D. Wisc.)
Michael R. Enea Sentenced to Two Years in Prison and Ordered to Pay More Than $750,000 in Restitution for Wire Fraud and Filing a False Federal Income Tax Return
The Securities and Exchange Commission announced that on July 15, 2015, U.S. District Court Judge Charles N. Clevert sentenced Michael R. Enea of Menomonee Falls, Wisconsin to two years in federal prison and ordered him to pay $756,000 in restitution for operating a Ponzi scheme from 2006 to 2013. On January 15, 2015, in an action that paralleled the Commission's securities fraud case against Enea, the U.S. Attorney's Office for the Eastern District of Wisconsin filed a criminal information against Enea alleging that he raised $2.1 million from more than ten investors by representing that he would purchase "credit card processing portfolios."
The criminal information alleges that Enea represented to investors that the credit card processing portfolios entitled investors to periodic "residual payments, which were based on the fees merchants paid to process credit card transactions and that the investments would earn annual returns ranging from 20 to 35 percent. Enea, however, never used the funds to purchase the credit card processing portfolios and, instead, used the funds to pay his own personal expenses and to repay other investors. As a result, the investors suffered net losses of more than $750,000. On March 4, 2015, Enea entered a guilty plea to one count of wire fraud and to one count of filing a false federal income tax return.
The Commission's case against Enea is based on the same conduct as the criminal case. The SEC's complaint, filed on October 13, 2013, alleged that Enea violated 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, by raising $2.1 million from 18 investors. On November 26, 2013, the Court entered an order, pursuant to Enea's consent, that permanently enjoins him from further violations of the securities registration, antifraud, and broker-dealer registration provisions of the federal securities laws and ordering him to pay $843,120 in disgorgement and prejudgment interest to be secured by Enea's personal residence located in Menomonee Falls, Wisconsin. On January 28, 2014, the Commission entered an order barring Enea from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.
For further information, see Litigation Release No. 22842 (October 11, 2013).