SEC Charges Orchestrator of Cryptocurrency Offering Fraud

Litigation Release No. 24930 / September 30, 2020

Securities and Exchange Commission v. Thomas J. Gity, et al., No. 2:20-cv-14342 (S.D.F.L. filed September 29, 2020)

The Securities and Exchange Commission yesterday announced charges against a Florida businessman who defrauded investors in a digital asset trading scheme.

The SEC's complaint alleges that Thomas J. Gity, a convicted felon with no professional financial industry experience, received at least $6.8 million from at least 18 investors by misrepresenting that he was a highly-profitable digital asset trader who never lost money during a trading day. As alleged in the complaint, Gity provided fake account statements to investors to create the illusion that he managed as much as $100 million in assets and generated extremely high returns, including providing one statement that purported to show returns in excess of 46% in a week. As alleged, while Gity promised investors that he would use their funds to trade digital assets and that their capital was not at risk, Gity transferred only $970,000 of the $6.8 million he received from investors into trading accounts. Gity allegedly transferred over $1.8 million of investor funds to his son and spent the remaining funds to make Ponzi-like payments to investors and on personal expenses and gambling.

The SEC's complaint, filed in federal court in Miami, charges Gity with violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. The complaint also names Gity's son, Thomas Gity, Jr. and Gity Jr.'s company, Treasure Coast Property Enterprises, LLC, as relief defendants. The SEC seeks a civil penalty and injunctive relief against Gity, including a conduct-based injunction that prevents Gity from participating in securities offerings. The complaint also seeks disgorgement with prejudgment interest from Gity and from the relief defendants, as well as an order freezing the assets of Gity and the relief defendants.

The SEC's investigation was conducted by Alexander Charap and Kathleen Strandell in the Miami Regional Office and supervised by Jessica M. Weissman and Glenn S. Gordon. The SEC's litigation is being led by Wilfredo Fernandez and Alice Sum and supervised by Andrew Schiff.