Litigation Release No. 23761 / February 28, 2017
Securities and Exchange Commission v. Tropikgadget FZE, et al., Civil Action No. 1:15 cv 10543-ADB (United States District Court for the District of Massachusetts)
SEC Obtains Final Judgments Against Promoter and Recipients of Illicit Proceeds from Pyramid Scheme Targeting Latino Communities
The Securities and Exchange Commission announced today that on February 24, 2017, the federal court in Boston, Massachusetts entered final judgments against defendant Andrew Arrambide of Sandy, Utah, and relief defendants Uninvest Financial Services, Corp. ("Uninvest"), RST5 Investments LLC ("RST5"), Parkway Real Estate LLC ("Parkway") of Florida, and Paulo Hideki Koga of Brazil, in a previously-filed enforcement action. In February 2015, the Commission charged two Portuguese companies operating under the name Wings Network, plus three company officers and 12 promoters, including Arrambide, with perpetrating an international pyramid scheme targeting Latino communities in the U.S.
The Commission alleged that Arrambide was a promoter of defendants Tropikgadget Unipessoal LDA and Tropikgadget FZE (collectively "Tropikgadget"), which operated under the name Wings Network. Arrambide appeared in many promotional videos and online conferences for Wings Network on the internet, traveled to several states, including Florida and Massachusetts, during 2014 to present at Wings Network promotional events, and promoted Wings Network on social media and on his personal website on the internet. The Commission also alleged that Uninvest, RST5, Parkway and Koga received wire transfers from Tropikgadget consisting of illicit proceeds of the alleged pyramid scheme.
The court entered summary judgment against Arrambide which permanently restrains and enjoins him from violating the unregistered securities offering provisions of Section 5 of the Securities Act of 1933. The judgment also permanently restrains and enjoins him from offering, operating, or participating in any marketing or sales program in which a participant is compensated or promised compensation solely or primarily (1) for inducing another person to become a participant in the program, or (2) if such induced person induces another to become a participant in the program. In addition, the judgment ordered Arrambide to pay a total of $106,568.50 in disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty, and the judgements against the relief defendants ordered Uninvest to pay a total of $4,815,892, RST5 to pay a total of $2,018,765, Parkway to pay a total of $312,185, and Koga to pay a total of $528,344 in disgorgement plus prejudgment interest. The court's entry of the final judgments concludes the SEC's litigation of this matter in its entirety.
The SEC's investigation was conducted by Scott R. Stanley, Dawn Edick, John McCann, Deena Bernstein, and Amy Gwiazda of the SEC's Boston Regional Office. The SEC's litigation was led by Ms. Bernstein and David London.
For further information, see Litigation Release Nos. 23209 (Feb. 27, 2015) (SEC Charges Operators of International Pyramid Scheme Targeting Latino Communities); 23351 (Sept. 17, 2015) (SEC Obtains Final Judgment Against Promoter of Pyramid Scheme Targeting Latino Communities); 23407 (Nov. 13, 2015) (SEC Obtains Final Judgment Against Pyramid Scheme Targeting Latino Communities); and 23548 (May 27, 2016) (SEC Obtains Final Judgment Against Massachusetts-Based Promoter of Pyramid Scheme Targeting Latino Communities); 23632 (September 1, 2016) (SEC Obtains Final Judgments Against Company Officers and Promoters of Pyramid Scheme Targeting Latino Communities); and 23647 (September 19, 2016) (SEC Obtains Final Judgments Against Company Officers and Promoters of Pyramid Scheme Targeting Latino Communities).