Washington, D.C., Sept. 2, 2010 — The Securities and Exchange Commission today charged a Branchburg, N.J.-based investment adviser and three of her firms with operating a multi-million dollar offering fraud involving the sale of phony promissory notes to investors, many of whom are retired or unsophisticated in investments.
The SEC alleges that Sandra Venetis told some investors that the promissory notes were guaranteed by the Federal Deposit Insurance Corporation and would earn interest of approximately 6 to 11 percent per year that would be tax-free due to a loophole in the tax code. She also told investors that she would use their money to fund loans to doctors that would be backed by Medicare reimbursement payments to those doctors. Instead of making investments, Venetis looted investor funds to pay business debts and personal expenses accrued from international travel, gambling, and home mortgages and property taxes. She also funneled cash to her relatives.
Venetis and the entities have agreed to settle the SEC's charges and consent to a court order that freezes their assets and requires monetary payments including financial penalties to be determined at a later date. Venetis also agreed to an SEC administrative action that bars her from future association with any investment adviser or broker-dealer.
"Venetis abused her position of trust to target older investors who were the most vulnerable to her egregious lies and misrepresentations," said Bruce Karpati, Co-Chief of the SEC's Asset Management Unit. "The SEC's enforcement action and the settlement reached ensure that she will never work in the securities industry again."
SEC Charges New Jersey Investment Adviser in Multi-Million Dollar Offering Fraud