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U.S. Securities and Exchange Commission

Litigation Release No. 23818 / April 28, 2017

Securities and Exchange Commission v. Serofim Muroff, et al., Case No. 1: 17-cv-00180-CWD (Dist. of Idaho filed April 28, 2017)

SEC CHARGES EB-5 OPERATOR WITH SECURITIES FRAUD

The Securities and Exchange Commission today announced that an Idaho man has agreed to pay back several million dollars he siphoned away for personal use rather than investing it as promised to create U.S. jobs through the EB-5 Immigrant Investor Program.

The SEC alleges that Serofim Muroff raised more than $140.5 million in EB-5 offerings to Chinese investors through his companies Blackhawk Manager and ISR Capital for the intended purposes of acquiring and developing luxury real estate in McCall, Idaho, and investing in gold mining ventures in Idaho and Montana. Muroff allegedly misappropriated more than $5 million in investor funds for such unrelated uses as an investment in a zip line operation as well as his purchase of two personal residences, a Range Rover, and a BMW.

In the settlement, which is subject to court approval, Muroff, Blackhawk Manager and ISR Capital consented to entry of a final judgment permanently enjoining them from future violations of Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and agreed to pay disgorgement of $5,062,082 plus interest totaling $865,270 and a penalty of $2 million. Muroff also agreed to be prohibited from conducting EB-5 offerings and acting as an officer or director of a public company. Equity Recap Account, LLC, another company through which Muroff allegedly misappropriated investor funds, consented to entry of a final judgment permanently enjoining it from future violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and agreed to pay disgorgement of $5,062,082 plus interest totaling $865,270 and a penalty of $2 million, on a joint-and-several basis with Muroff, Blackhawk Manager and ISR Capital. Muroff's bookkeeper and administrative assistant Debra L. Riddle, who was charged in the SEC's complaint along with Muroff and his companies, agreed to a permanent injunction against future violations of Section 17(a) of the Securities Act, to pay disgorgement of $503,417 plus interest totaling $81,626 and a penalty of $100,000. The defendants neither admitted nor denied the allegations in the SEC's complaint.

The SEC's investigation was conducted by Alice Liu Jensen, Rahul Kolhatkar, and Ellen Chen of the San Francisco office, and the case was supervised by Steven D. Buchholz. The SEC appreciates the assistance of U.S. Citizenship and Immigration Services.

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SEC Complaint

 

https://www.sec.gov/litigation/litreleases/2017/lr23818.htm


Modified: 05/01/2017