During the relevant time, Macquarie maintained sufficient funds to satisfy its secured deficiency; however, funds required to be held in secured accounts are distinct from funds required to be held in segregated accounts. According to the CFTC, Macquarie immediately undertook measures to avoid a similar deficiency from occurring in the future.
SEC halts prime bank investment scheme
The Securities and Exchange Commission (SEC) announced charges and an emergency asset freeze against a Miami-based attorney and other perpetrators of a prime bank investment scheme that promised exorbitant returns from a purported international trading program.
Prime bank schemes lure investors to participate in a sham international investing opportunity with phony promises of exclusivity and enormous profits. The SEC alleges that attorney Bernard H. Butts, Jr. has acted as an escrow agent to enable Fotios Geivelis, Jr. and his purported financial services firm Worldwide Funding III Limited to defraud approximately 45 investors out of more than $3.5 million they invested in a trading program that doesn’t actually exist. Geivelis, who lives in Tampa and uses the alias “Frank Anastasio” with investors, touted returns of 6.6 million Euros (approximately $8.7 million converted to U.S. dollars) for investors within 15 to 45 business days on an initial investment of $60,000 to $90,000 in U.S. dollars. Geivelis and Butts assured investors that their funds would remain with Butts in an escrow account until Worldwide Funding acquired the bank instruments necessary to generate the promised returns. Butts instead has been doling out investor funds almost as soon as they’re received to enrich himself, sales agents, and Geivelis, who has been spending the money on such personal expenses as travel and gambling.
The SEC’s complaint, filed under seal on August 29 in federal court in Miami, also charged three sales agents who Geivelis and Butts paid to sell interests in the scheme: Douglas J. Anisky of Delray Beach, Fla., James Baggs of Lake Forest, Calif., and Sidney Banner of Delray Beach, Fla., and his company Express Commercial Capital. The court granted the SEC’s request for an asset freeze on Aug. 30, and the case was unsealed late Friday, Sept. 6.
“Geivelis attempted to add a twist of legitimacy to a classic prime bank scheme by using a long-time attorney as an escrow agent to give investors the false impression that their money was secure,” say Julie K. Lutz, acting co-director of the SEC’s Denver regional office. “Meanwhile, Geivelis and Butts have misused investor funds and made lulling statements to investors that portray the sham trading program as successful and payments to investors as imminent.”
According to the SEC’s complaint, investors were lured through the Internet, telephone, and personal contact with promises of extraordinary profits. Investors were told their $60,000 to $90,000 investment would pay for bank charges to lease a standby letter of credit (SBLC) in the amount of 10 million Euros from a banking group in Europe. The SBLCs were to be used to acquire loans, and the funds from the loan were to be placed in a securities trading program. Investors were promised that after their initial profit of at least 6.6 million Euro within 15 to 45 business days, the securities trading program would generate a weekly return of approximately 14% for 40 to 42 weeks.
The SEC alleges that investors were falsely promised that their money was being deposited into Butts’ attorney trust account, and Butts would not release the funds until he received proof from the receiving bank that a $10 million Euro SBLC had been deposited into the securities trading program to generate profits for investors. Contrary to these representations by Butts, Geivelis, and the sales agents, no SBLC acquisitions ever occurred, no loans were obtained, and no promised returns were earned in a trading program or paid to investors. Investors were not told that instead of using the funds to obtain SBLCs, Butts and Geivelis each took approximately 45% and paid approximately 10% to the sales agents.
The SEC’s complaint charges all defendants with violations of the antifraud and securities registration provisions of the federal securities laws. The complaint also charges Butts, Geivelis, Anisky, Banner, Express Commercial Capital, and Baggs with violations of the broker-dealer registration provisions of the federal securities laws. The SEC seeks disgorgement of ill-gotten gains, financial penalties, and permanent injunctions. The SEC’s complaint names several relief defendants: Butts’ law firm, his wife Margaret A. Hering, and Butts Holding Corporation as well as two other companies with ties to Geivelis (Global Worldwide Funding Ventures) and Anisky (PW Consulting Group). The complaint names relief defendants for the purposes of recovering any ill-gotten assets from the fraud that may be in their possession.
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