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Thursday, October 30, 2008

SEC Settles Allegations of $30 Million Ponzi Scheme in Florida

The SEC filed a civil injunctive action in the United States District Court for the Southern District of Florida against Andres L. Pimstein, The Bottom Line of South Florida, Inc. ("Bottom Line") and Summit Trading LLC ("Summit") alleging they conducted a $30 million Ponzi scheme.  According to the complaint, from at least 2005 to April 2008, the defendants offered and sold more than $30 million of securities to at least 80 investors in at least five states, purportedly to fund an export business that Pimstein and his agents operated through Bottom Line and Summit. According to the complaint, Pimstein and his agents told investors that Bottom Line and Summit would use the proceeds from their investments to buy iPods and other personal electronics from vendors in the United States for resale to Ripley Corp., S.A., a Chilean company that operates one of the largest department store chains in South America. The complaint further alleges that Pimstein and his agents claimed Bottom Line and Summit had a competitive edge over other electronics suppliers because Pimstein was the cousin of Ripley's chief executive officer and had previously worked for Ripley.

The complaint alleges that, contrary to defendants' representations, they purchased very few electronics with investor funds and did not re-sell any electronics to Ripley. Instead, defendants operated a large Ponzi scheme by using newly invested funds to make principal and interest payments to existing investors. The defendants also paid commissions to the agents who solicited investors on the defendants' behalf. In addition, Pimstein used investor funds to pay his personal expenses. According to the complaint, in April 2008, the defendants' Ponzi scheme collapsed when the interest and principal Bottom Line and Summit were obligated to pay investors substantially exceeded the amount of new funds Pimstein and his agents were able to raise from investors. The complaint alleges that Pimstein subsequently confessed to local police that that he had operated a Ponzi scheme and admitted that Ripley never purchased any electronics from the defendants.

In its complaint, the Commission seeks permanent injunctions, disgorgement plus prejudgment interest and civil penalties against the defendants. Upon the filing of the Commission's complaint, and without admitting or denying the allegations in the complaint, Pimstein, Bottom Line and Summit consented to the entry of a judgment permanently enjoining them from violating the above-mentioned provisions of the federal securities laws. The judgment also orders the defendants to pay disgorgement plus prejudgment interest and civil money penalties, the amounts of which will be determined by the Court at a later date.  The United States Attorney's Office for the Southern District of Florida conducted a parallel investigation of this matter. Simultaneous with the Commission's announcement of this action, the United States Attorneys Office announced the filing of criminal charges against Pimstein alleging mail and wire fraud. The SEC also acknowledges the assistance of the Miami Beach Office of the Federal Bureau of Investigation and the Superintendencia de Valores y Seguros of Chile (SVS) with this investigation.

http://lawprofessors.typepad.com/securities/2008/10/sec-settles-all.html

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Comments

Wall Street has lost investors billions and even trillions of dollars, and I don't see any indictments even after they used tax payer money for vacations and undeserved bonuses, this is pure selective prosecution, on general principal I would find this guy NOT guilty.

Posted by: Sailingwindward | Oct 30, 2008 5:57:36 PM

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