(HedgeCo.Net) The U.S. District Court for the Central District of California has entered final judgments by consent against six defendants for their roles in a fraudulent prime back scheme. Recidivist David Sims, his partner, Mario Procopio, and their lawyer, Ralph Craig Greaves, together with three companies Sims and Procopio controlled, agreed to pay more than $3 million to settle the SEC’s charges.
The SEC’s complaint, filed on May 23, 2019, alleged that Sims, of Costa Mesa, California, and Procopio, of Newport Beach, California, through their respective entities, operated a fraudulent scheme that raised over $1.4 million from investors. To entice potential investors, Sims and Procopio falsely claimed investors’ money would be invested in “prime bank” financial instruments that would generate astronomical returns of 1,200% to 40,000%. The complaint alleged that Sims and Procopio falsely told investors they had special access to trade platforms used by governments, corporations, and wealthy investors to buy vast sums of currency, usually $500 million or more, at a discounted price. Sims and Procopio allegedly told investors they could “piggyback” their money on these large trading platforms and reap huge returns with “absolutely no risk.” However, neither the financial instruments nor the trading platforms existed. In actuality, Sims and Procopio allegedly used nearly all of the investor funds for their own personal expenses, including cars, jewelry, travel, and golf outings. The SEC’s complaint further alleged that Geaves aided and abetted the scheme by, among other things, allowing investors to deposit money into his attorney trust account, which gave the scheme a cloak of legitimacy. Greaves then allegedly transferred most of these funds to Sims and Procopio despite knowing that they were misleading investors.
Without admitting or denying the allegations in the complaint, the defendants consented to the entry of final judgments that permanently enjoin each of them from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgments against Sims and Procopio also impose conduct-based injunctions that prohibit each of them from participating in any unregistered offering of securities.
Sims consented to pay a civil penalty of $813,000 and, jointly and severally with SIMS Equities, Inc., to pay disgorgement of $813,000 and prejudgment interest of $123,028. Procopio consented to pay a civil penalty of $597,000 and, jointly and severally with ALC Holdings, LLC and El Cether-Elyown, to pay disgorgement of $597,000 and prejudgment interest of $90,249. Greaves consented to pay a civil penalty of $100,000.