SEC Obtains Final Judgment Against Pyramid Scheme Promoter
Litigation Release No. 24729 / January 31, 2020
Securities and Exchange Commission v. DFRF Enterprises LLC, et al., Civil Action No. 1:15- cv-12857-PBS (D. Mass. filed June 30, 2015)
On January 30, 2020, the U.S. District Court for the District of Massachusetts entered a final judgment against Jeffrey A. Feldman, a Florida-based promoter of a pyramid and Ponzi scheme involving two purported gold mining companies. With entry of the judgment against Feldman, the SEC has now obtained final judgments against all of the defendants who were charged in this action.
In June 2015, the SEC charged Feldman and six other individuals, as well as two purported gold mining companies, Massachusetts-based DFRF Enterprises LLC, and Florida-based DFRF Enterprises, LLC, for their roles in the scheme that targeted investors in Spanish and Portuguese-speaking communities. The complaint alleged that the defendants falsely told investors that the DFRF companies owned more than 50 gold mines in Africa and Brazil, and that an investment in these companies would be fully insured and guaranteed. Feldman appeared in promotional videos for the DFRF companies as part of a sales pitch to investors. The defendants allegedly raised more than $15 million from at least 1,400 investors between 2014 and 2015.
The court's final judgment by consent against Feldman enjoins him from violating the registration provisions of Section 5 of the Securities Act of 1933 and also 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. The final judgment further orders Feldman to pay disgorgement and prejudgment interest of $151,131, but waives payment of all but $15,000 and does not impose a civil penalty based on his financial condition.
The SEC previously obtained final judgments against the DFRF companies and all of the other individual defendants, requiring them to pay more than $29 million in disgorgement and prejudgment interest, and more than $2.9 million in penalties.