(HedgeCo.Net) The Securities and Exchange Commission has charged an individual and seven corporate entities that he controlled with defrauding investors through the promotion and operation of a multimillion dollar Ponzi and pyramid scheme.
The SEC alleges that Eric J. “EJ” Dalius, who pled guilty in 2001 to criminal charges in connection with a long distance phone card scam, and the companies he controlled under the umbrella name “Saivian,” sold securities that entitled holders to receive 20% cash back on their shopping purchases in exchange for paying a fee of $125 every 28 days, and submission of receipts. Dalius and the Saivian companies falsely claimed that Saivian funded its cash back payments to members by monetizing the point-of-sale receipt data submitted by its members. Instead, they satisfied promised returns to some investors through the investments of others rather than through legitimate business activity. Dalius and his companies also allegedly promised a daily residual income stream for affiliates who sold Saivian memberships to downline recruits. The SEC also alleges that Dalius hid his creation and ownership of the Saivian scheme and failed to disclose his 2001 criminal conviction in connection with the earlier multi-level marketing fraud.
According to the SEC, Dalius stole a large portion of the more than $165 million generated by the scheme through investor contributions and the accumulation in value of Bitcoin that investors paid Dalius to purchase memberships. The SEC alleges that Dalius used Saivian investor contributions to fund personal investment accounts with tens of millions of dollars and to purchase private jet travel, luxury vacations, sports and entertainment tickets, multimillion dollar properties in Miami Beach and New York City, and an exotic sports car.
The SEC’s complaint, filed under seal in federal court in California on October 3, 2018 and unsealed on October 17, 2018 in connection with the court’s denial of the SEC’s motion for ex part emergency relief, charges Dalius, Professional Realty Enterprises, Inc., Saivian LLC, Savings Network App LLC, Saving Network App Limited, Saivian International Limited, Saivian INT Limited, and Realty Share Network LLC with violating the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act, Section10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The complaint alleges that Dalius is liable for the conduct of the Saivian corporate entities as their control person and seeks injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. The complaint also names several relief defendants for the purpose of recovering funds that were unlawfully obtained.
The SEC’s litigation will be led by Kenneth Donnelly and Derek Bentsen with assistance from Kenneth Guido. The investigation which led to the filing of charges against Dalius and the Saivian companies was conducted by Geoffrey Gettinger and Michael Flanagan, and supervised by Ivonia Slade. The SEC appreciates the assistance of the Hong Kong Securities and Futures Commission and the United Kingdom Financial Conduct Authority.