Wednesday, September 11, 2013

SEC Halts Florida-Based Prime Bank Investment Scheme

By Tim Dulaney, PhD, FRM and Tim Husson, PhD

On Monday, the SEC charged a Miami-based group with perpetrating a prime bank investment fraud. The group, which includes Florida attorney Bernard H. Butts, Jr., purported financial services provider Fotios Geivelis, Jr. (a/k/a "Frank Anastasio"), several sales agents, and their allegedly fraudulent business entities (Express Commercial Capital LLC and Worldwide Funding III Limited LLC), are also subject to an emergency asset freeze.  You can find the full complaint here (PDF).

Prime bank programs promise high returns and are purported to be backed by some well-known international agency, such as the World Bank, International Monetary Fund, or the central bank of a sovereign nation.  The SEC's investor alert on prime bank programs uses no uncertain terms [emphasis added]:
If someone approaches you about investing in a so-called "Prime Bank" program, "Prime World Bank" financial instrument, or similar high-yield security, you should know that these investments do not exist. They are all scams.
The group charged on Monday allegedly lured investors by promising to obtain a standby letter of credit (SBLC), that would allow for an international securities trading program that would generate returns on their behalf.  The SEC claims that from April 2012 to the present, they raised at least $3.5 million from US and international investors by claiming future returns on the order of 14% per week (!) for up to 42 weeks.

According to the complaint, neither the trading program nor the SBLC actually existed and the funds were used for travel and gambling expenses.  After raising the funds, the attorney Butts and Geivelis (Anastasio) each took about 45% with the remaining being used to compensate the sales agents.  The group is also accused of using Butts' status as an attorney to lure investors into a false sense of security.

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