Ohio adviser/coffee shop investor charged with $39M fraud
The SEC claims the unregistered investment adviser promised clients he'd put their money into safe investments. Instead, he allegedly poured the cash into start-up coffee shops, real estate, and his own pocket.
An unregistered investment adviser in Ohio who allegedly defrauded clients out of more than $39 million was charged today by the Securities and Exchange Commission, the U.S. attorney’s office and the Commodities Futures Trading Commission.
According to the SEC complaint, Enrique F. Villalba of Cuyahoga Falls operated a fraudulent venture called Money Market Alternative LP from 1986 to 2009 and attracted 31 clients from Ohio, California, Washington, Tennessee and Illinois.
Mr. Villalba promised these clients careful custody of their money, as well annual returns of 8% to 12%. He told them he would invest conservatively in Standard & Poor’s 500 contracts, Treasury bills or money market accounts but instead invested in commodities futures contracts and lost most of their money, according to the complaint.
The complaint further alleges that Mr. Villalba used the money to run his business, pay himself a salary and fees, and invest in real estate and startup coffee shops. He hid the truth by writing up false statements for clients, and he also used Ponzi scheme tactics such as paying older investors from new investors’ funds.
The SEC seeks a permanent injunction, as well as disgorgement with prejudgment interest and a financial penalty. The CFTC seeks restitution, disgorgement of ill-gotten gains, civil monetary penalties and a permanent injunction.
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