SEC files charges in alleged $19.3 million fraud offering huge returns
The headquarters building of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C., on May 10, 2010. Photographer: Joshua Roberts/Bloomberg
Regulator claims defendant lured five individuals with promise of up to 362% gain.
The Securities and Exchange Commission filed charges Friday against a Long Island, N.Y., man and an investment partnership for defrauding investors of more than $19.3 million.
In its complaint, the agency alleges that from 2013 through December of last year, Paul Andrews Rinfret sold limited partnership interests to at least five investors in Plandome Partners LP, an investment fund operated by him and Plandome LLC. He touted a trading strategy in S&P 500 futures contracts and foreign currency that produced returns as high as 362% over several years.
The SEC said Mr. Rinfret misrepresented the fund’s current and historical performance, its assets under management and what he would do with the investors’ money.
“For over five years, Rinfret perpetrated a brazen, multimillion dollar offering fraud scheme, defrauding investors by telling them that they would be investing in a successful trading strategy with a proven track record,” the SEC complaint states. “What the investors did not know is that Rinfret was in fact an unsuccessful trader and was employing a carefully crafted web of lies and deception to raise millions of dollars with the intention of using the proceeds to enrich himself and his family.”
(More: SEC charges financier for stealing $43 million in client funds)
The bottom line was that Mr. Rinfret was a thief, the SEC charged.
“In reality, Rinfret simply stole much of the money that Plandome received from investors, using millions of dollars of investor funds to pay for personal living expenses and extravagant vacation rentals, lavish parties, jewelry and other luxury goods, make payments to family members and pay back earlier investors who sought redemptions,” the SEC complaint states.
The SEC said Mr. Rinfret covered up the scheme by sending the investors fabricated monthly statements.
The agency is seeking disgorgement of Mr. Rinfret’s proceeds in the fraud and civil monetary penalties. In a parallel action on Friday, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Mr. Rinfret.
A woman who answered the phone at Plandome Partners in Manhasset, N.Y., said Mr. Rinfret was unavailable for comment.
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