The United States Securities and Exchange Commission (SEC) has charged two associates of former President Donald Trump’s lawyer Rudy Giuliani for allegedly committing fraud in raising millions of dollars from investors.
In a complaint filed on Feb. 4 in a Manhattan federal district court, SEC alleged that Lev Parnas and David Correia made “false and misleading representations” to raise over $2 million dollars from investors in their company, Fraud Guarantee.
According to SEC, Parnas and Correia told potential investors that the funds would be used to develop insurance products to help customers from financial losses caused by investment or consumer fraud. SEC further said that the defendants also told investors that they raised $5 million dollars and “had personally invested hundreds of thousands of dollars of their own money into the company.”
However, the SEC alleged that “these representations were false” and that the defendants acted as unregistered brokers.
“Defendants knew or recklessly disregarded that their use of investor funds for personal expenses was not consistent with the representations they had made to investors about how their investments would be used—that is, to fund the purported business operations of Fraud Guarantee,” SEC alleged in the complaint.
Parnas and Correia allegedly misappropriated the funds “to pay for lavish personal expenses unrelated to the company,” which included “travel, luxury goods, and untraceable cash withdrawals,” SEC said.
The SEC seeks to permanently enjoin the defendants, including all persons who actively participated in the scheme from violating securities laws. The commission also seeks for Correia and Parnas to disgorge the profits and to pay civil monetary penalties.
The allegation mirrors a criminal case where Correia pleaded guilty in committing wire fraud connected to the Fraud Guarantee scheme in October 2020 and is currently waiting for his sentence.
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