SEC Charges Former Broker Using SEC Letterhead with Defrauding First Responders and Others
The Securities and Exchange Commission has charged a San Antonio-area businessman and his company with running an alleged multimillion-dollar scheme that purportedly defrauded retired San Antonio police officers and other first responders.
The Securities and Exchange Commission has charged a San Antonio-area businessman and his company with running an alleged multimillion-dollar scheme that purportedly defrauded retired San Antonio police officers and other first responders.
The SEC’s complaint alleges that Victor Lee Farias and his company, Integrity Aviation & Leasing (IAL), raised $14 million from investors, promising that they would use the funds to purchase engines and other aircraft parts for leasing to major airlines.
Farias is a former broker that was last registered in 2013, according to his BrokerCheck profile. He was affiliated with two firms over the course of two years, Capital Guardian and Further Lane Securities, both of which were expelled by FINRA in January 2018.
The SEC claims that Farias touted his supposed investment experience and his firm’s competitive advantages, and he represented that all investments would be secured by IAL’s assets.
According to the complaint, many of the investors were retirees who, in order to invest their retirement funds, had to withdraw the funds from their retirement accounts and deposit them in newly created self-directed IRA accounts.
The complaint alleges that IAL never purchased any engines and spent only a small portion of investor funds on aircraft parts. Farias and IAL allegedly diverted more than $11.6 million for unauthorized purposes, such as making $6.5 million in Ponzi-like payments to investors and investing $2.7 million to fund a friend’s business. Farias also allegedly misappropriated $2.4 million for personal expenses.
The SEC alleges that Farias continued to mislead investors after he learned of the SEC’s investigation, including by using the letterhead from the SEC’s investigative subpoena as “proof” for investors that he was working with the SEC to take IAL public.
“As we allege, Farias encouraged his victims to invest their hard-earned retirement nest eggs into his fraudulent business,” said David Peavler, regional director of the SEC’s Fort Worth office. “Investors should always proceed cautiously whenever someone suggests moving funds from traditional retirement accounts to self-directed IRAs in order to make an investment.”
The SEC’s complaint charges Farias and IAL with violating antifraud and securities registration provisions of the federal securities laws. The complaint seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
