May 10, 2022/US SEC
On April 25, 2022, the Securities and Exchange Commission obtained a final judgment against the former Chief Financial Officer of a Marin County, California real estate investment and management company for his role in a Ponzi scheme that defrauded investors.
The SEC’s complaint, filed on March 31, 2022 in the U.S. District Court for the Northern District of California, alleged that from October 2016 through May 2020, Marin, California resident, Manuel A. Romero falsified financial statements provided to investors and made fraudulent cash transfers as part of a Ponzi scheme operated by Professional Financial Investors, Inc. (“PFI”) and its now-deceased founder and former president. The SEC alleged that PFI and related entities raised hundreds of millions of dollars from investors by falsely telling them their money would be used primarily to purchase real property and make improvements to real property owned by PFI and its related entities. Instead, according to the complaint, a substantial portion of investor funds were used to pay previous investors or to cover operating losses. The SEC alleged that Romero played a key role in carrying out the Ponzi scheme by commingling investor funds across the various PFI entities’ bank accounts and making distributions to existing investors from new investor funds.
The SEC’s complaint charged Romero with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. Without admitting or denying the SEC’s charges, Romero consented to the court’s order that permanently enjoins him from violating these provisions and bars him from serving as officer or director of a public company. Romero also agreed to pay disgorgement of $91,819 with prejudgment interest of $6,655 and a civil penalty of $50,000.
The SEC’s investigation was conducted by Mike Foley with the assistance of Brent Smyth, under the supervision of Tracy L. Davis and Monique C. Winkler of the San Francisco Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of California and the Federal Bureau of Investigation.