SEC Charges Long Island Investment Professional in $8 Million Scam Targeting Long-Standing Brokerage Customers
Litigation Release No. 24152 / May 30, 2018
Securities and Exchange Commission v. Steven Pagartanis, Civil Action No. 18-cv-3150 (E.D.N.Y., filed May 30, 2018)(JFB)
The Securities and Exchange Commission today charged a former registered representative with defrauding long-standing brokerage customers in an $8 million investment scam.
According to the SEC's complaint, Steven Pagartanis, who was affiliated with a registered broker-dealer, told some investors - including retirees who had been Pagartanis's customers for many years - that he would invest their funds in either a publicly-traded or private land development company. He promised that the funds would be safe and also promised guaranteed monthly interest payments on the investments. At Pagartanis's direction, his investors wrote checks payable to a similarly-named entity that was secretly controlled by Pagartanis. In all, the customers invested approximately $8 million, which Pagartanis used to pay personal expenses and make the guaranteed "interest" payments to his customers. To conceal the scam, which unraveled earlier this year when Pagartanis stopped making the so-called interest payments to customers, Pagartanis created fictitious account statements reflecting ownership interests in the land development companies.
The Suffolk County District Attorney's Office today filed criminal charges against Pagartanis.
The SEC's complaint, filed in federal district court in Brooklyn, charges Pagartanis with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking a judgment ordering Pagartanis to disgorge his ill-gotten gains plus prejudgment interest, and to pay financial penalties.
The SEC's investigation, which is continuing, is being conducted by Gerald Gross, Haimavathi Marlier, Sheldon Mui and Neil Hendelman of the New York Regional Office. The litigation will be led by Ms. Marlier and Mr. Mui. The case is being supervised by Lara Shalov Mehraban. The SEC appreciates the assistance of the Suffolk County District Attorney's Office and FINRA.