SEC Charges Florida Resident and His Corporate Entity for Fraudulent Securities Offerings

Litigation Release No. 24689 / December 11, 2019

Securities and Exchange Commission v. Palm Beach Atlantic Financial Group, LLC and William A. Smith, No. 9:19-cv-81652-RAR (S.D. Florida filed December 11, 2019)

The Securities and Exchange Commission today charged Palm Beach Atlantic Financial Group, LLC and its managing member and sole owner, William A. Smith, with engaging in the fraudulent offer and sale of over $1 million of securities, ostensibly to obtain capital for the purchase, remodeling, and operation of real estate properties.

According to the SEC's complaint, from at least 2014 through early 2017, Smith engaged in the unregistered fraudulent offer and sale of over $1 million in securities to over thirty investors. According to the SEC's complaint, Smith made numerous oral and written misrepresentations about the use of investor funds, including stating that funds would be used to purchase, remodel, and operate specific properties. However, the SEC's complaint alleges that Smith shifted hundreds of thousands of dollars into and out of various bank accounts when he deemed it necessary to support whatever project needed funding at the time. In addition, Smith allegedly misled investors about Palm Beach's track record of real estate investments by falsely claiming to have vast experience and success with a proven strategy that protected the investment assets as well as the investor.

The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, charges Palm Beach and Smith with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and the registration provisions of Section 5(a) and 5(c) of the Securities Act. Without admitting or denying the allegations in the complaint, Palm Beach and Smith have consented to the entry of a final judgment that permanently enjoins them from violations of the charged provisions and orders them to pay, joint and severally, a civil monetary penalty of $75,000. The settlement is subject to court approval.

The SEC's investigation was conducted by L. Delane Olson and supervised by Kevin Guerrero and Antonia Chion. The matter was assisted by Olivia S. Choe. The SEC appreciates the assistance of the Florida Office of Financial Regulation, the Securities and Business Investments Division of the Connecticut Department of Banking, and the Financial Industry Regulatory Authority.