SEC Charges New Jersey Investment Adviser with Securities Fraud

April 10, 2019/US SEC

The Securities and Exchange Commission filed a civil injunctive action, charging a New Jersey resident with defrauding an investor by lying about his trading success, concealing trading losses, and misappropriating funds.

The SEC’s complaint, filed in federal court in Brooklyn, alleges that Gonzalo Ortiz, of Hackensack, New Jersey, falsely touted his success in investing in stocks and promised the investor a minimum 50% return in a year, and induced the investor to give him control of over $570,000 the investor’s retirement savings. The complaint alleges that contrary to these promises, Ortiz misappropriated almost half of the funds and invested the other funds in high-risk microcap companies that generated significant losses. Ortiz then concealed the misappropriation and losses by providing the investor with a phony account statement that falsely showed high returns. According to the complaint, Ortiz misappropriated approximately $224,500 of the investor’s money, and lost approximately $290,000 through his trading.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Ortiz.

The SEC’s complaint alleges that Ortiz violated the antifraud provisions of the securities laws: Section 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking permanent injunctions and financial penalties against Ortiz, and return of allegedly ill-gotten gains with prejudgment interest.

The SEC’s investigation has been conducted by Hane L. Kim, Jennifer K. Vakiener, Joseph Darragh, and Steven G. Rawlings of the New York Office. The SEC’s litigation against Ortiz will be led by Kevin McGrath, Ms. Kim, and Ms. Vakiener. The case is being supervised by Lara S. Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York and the Federal Bureau of Investigation.

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