(HedgeCo.Net) The Securities and Exchange Commission has charged Pisces Income Fund, LLC, Pisces Income Fund Parallel, LLC, and their principals Shannon Westhead and Alec Vagnozzi; Capricorn Income Fund I, LLC, Capricorn Income Fund I Parallel, LLC, and their principal Albert Vagnozzi; Merchant Services Income Fund, LLC, Merchant Services Income Fund Parallel, LLC, and their principal Michael Tierney alleging violations of the federal securities laws in connection with their participation in the more than $500 million unregistered and fraudulent securities offering by Complete Business Solutions Group, d/b/a Par Funding (“CBSG”). These entities, acting as agent funds of CBSG, and individuals raised more than $65 million from approximately 260 investors nationwide for the purpose of investing in CBSG in violation of the antifraud, securities registration, and broker-dealer registration provisions of the securities laws.

In addition to participating in CBSG’s unregistered offering, the SEC’s complaint alleges that when soliciting investors, the individual defendants made material misrepresentations and omitted material information concerning CBSG’s regulatory history and the criminal background of CBSG’s principal. The SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, charges Westhead, Alec Vagnozzi, Albert Vagnozzi, and Tierney with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as violating the broker-dealer registration provisions of Exchange Act Section 15(a). The complaint also alleges all defendants violated the registration provisions of Section 5 of the Securities Act. The SEC’s complaint seeks permanent injunctions and disgorgement of ill-gotten gains with prejudgment interest against all defendants, as well as civil money penalties against Westhead, Alec Vagnozzi, Albert Vagnozzi, and Tierney.

The SEC also filed a settled civil injunctive action against ABFP Income Fund 3, LLC; ABFP Income Fund 3 Parallel, LLC; ABFP Income Fund 4, LLC; ABFP Income Fund 4 Parallel, LLC; ABFP Income Fund 6, LLC; ABFP Income Fund 6 Parallel, LLC; ABFP Multi-Strategy Investment Fund, LP; ABFP Multi-Strategy Investment Fund 2, LP; and ABFP Income Fund Parallel, LLC based on their participation in CBSG’s offerings. The ABFP Funds were formed at various points in 2019 by Dean Vagnozzi, whom the Commission charged in its initial CBSG action. Through the ABFP Funds, Dean Vagnozzi raised approximately $99 million from more than 570 investors. In this settled action, also filed in the Southern District of Florida, the ABFP Funds, without admitting or denying the SEC’s findings, agreed to an order finding they violated the registration provisions of Section 5 of the Securities Act and injunctive relief as well as disgorgement of ill-gotten gains plus prejudgment interest.

This is the fourth enforcement action related to the CBSG fraud. In July 2020, the SEC filed an emergency action against CBSG and obtained, among other relief, emergency orders freezing CBSG’s assets and appointing a receiver over certain related entity defendants. See SEC vs. Complete Business Solutions Group Inc. d/b/a/ Par Funding et al., No. 9:20-Cv-81205 (S.D.FL Filed Jul 31, 2020). In June 2022, the SEC announced charges against registered investment adviser A.G. Morgan Financial Advisors, LLC in connection with the firm’s unlawful participation in CBSG’s fraudulent offering; and in July 2022, the SEC announced settled charges against Philadelphia attorney John W. Pauciulo in connection with his role in CBSG’s offering.