SEC Charges CEO and Company with Engaging in a Multimillion Dollar Affinity Fraud Scheme
Litigation Release No. 25225 / September 27, 2021
Securities and Exchange Commission v. Star Chain, Inc. and Timur Efe aka Omer Casurluk, Civ. Action, o. 1:21-cv-03944 (N.D. Ga. filed Sept. 24, 2021)
The Securities and Exchange Commission charged Alpharetta, Georgia resident Omer Casurluk (also known as Timur Efe) and the entity he controls, Star Chain, Inc., with defrauding investors who shared Casurluk's Turkish cultural and religious background.
The SEC's complaint, filed in the United States District Court for the Northern District of Georgia, alleges that, from November 2016 until 2019, Casurluk and Star Chain raised approximately $9 million from unsophisticated investors, many of whom spoke little English and had recently emigrated from Turkey to the United States, under the guise of investing in several quick-serve restaurant franchises. Casurluk and Star Chain allegedly told investors that Star Chain and the investors would make equal capital contributions to acquire the restaurants and would be "50/50" owners. In reality, as further alleged, Casurluk and Star Chain inflated the restaurants' purchase price to make it appear that they had contributed to the purchases when only investors' funds had been used to purchase the restaurants. Moreover, contrary to their disclosures, Casurluk and Star Chain allegedly did not identify the investors as owners of the restaurants in franchise documents or otherwise. Finally, according to the complaint, Casurluk misappropriated investors' money for his own personal use and to support other businesses he owned, including a construction company and unrelated quick serve restaurants.
The SEC's complaint charges Casurluk and Star Chain with violating 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. Without admitting or denying the allegations in the SEC's complaint, Casurluk and Star Chain each consented to the entry of an order permanently enjoining them from violating the charged provisions, and authorizing the court to determine at a later date the amount of disgorgement, prejudgment interest, and civil money penalties that each defendant shall pay.
Investors should be aware that many fraudsters try to take advantage of the trust that having something in common creates, such as a common nationality or ethnicity. The SEC's Office of Investor Education and Advocacy and the Division of Enforcement's Retail Strategy Task Force have issued an Investor Alert with tips on how investors should avoid investment decisions based solely on common ties with someone recommending or selling the investment.
The SEC's investigation was conducted by enforcement staff in the Atlanta Regional Office. The investigation was led by Justin Delfino and supervised by Peter Diskin and Justin Jeffries. The SEC's litigation will be led by Robert Schroder and supervised by Graham Loomis.