The Securities and Exchange Commission has charged two former registered representatives, Minish “Joe” Hede and Kevin Graetz, for acting as unregistered brokers in the sale of securities issued by Belize Infrastructure Fund I LLC.
The SEC alleges that Hede and Graetz sold approximately $9.6 million worth of Belize fund promissory notes to their customers at the brokerage firm where they were then employed, even though the firm had already declined to sell the product to its customers. The SEC claims that the pair received hundreds of thousands of dollars each in illicit commissions.
According to their Brokercheck profiles, Hede and Graetz were both terminated from Paulson Investment Company on April 28, 2017 following a “customer-related arbitration claim alleging fraud, negligence, unjust enrichment.” The SEC’s complaint indicates that both were terminated “for failing to cooperate with the broker-dealer’s investigation into allegations of selling away,” a prohibited practice of selling a security that was not approved by the firm.
In 2018, the SEC charged the fund and its owner, Brent Borland of Borland Capital Group, with misappropriating nearly $6 million of funds obtained from investors. Borland raised a total of $21.9 million and pleaded guilty in March 2019 to one count each of securities fraud, wire fraud, and conspiracy, according to the Department of Justice.
The SEC seeks injunctive relief, disgorgement of ill-gotten gains and prejudgment interest, and civil money penalties.