Thursday, December 13, 2012

SEC Charges Prominent Entrepreneur in Miami-Based Scheme

The SEC charged a prominent Miami-based entrepreneur with defrauding investors by grossly exaggerating the financial success of his company that purportedly produced housing materials to withstand fires and hurricanes. The entrepreneur stole nearly half of the money raised from investors to pay the mortgage on his multi-million dollar mansion and other lavish highlife expenses.

The SEC alleges that the entrepreneur, who is a former Ernst & Young Entrepreneur of the Year award winner, raised at least $16.8 million from investors by portraying InnoVida Holdings LLC as having millions of dollars more in cash and equity than it actually did. He sometimes solicited investors one-on-one at political fundraising events. According to the SEC, to add an air of legitimacy to his company, the entrepreneur assembled a high-profile board of directors that included a former governor of Florida, a lobbyist, and a major real estate developer. He falsely told a potential investor he had invested tens of millions of dollars of his own money as InnoVida's largest stakeholder, and he hyped a Middle Eastern sovereign wealth fund investment as a ruse to solicit additional funds from investors.

The SEC also charged InnoVida's chief financial officer, a certified public accountant living in Pembroke Pines, Fla., who helped the entrepreneur create the false financial picture of InnoVida.

The SEC alleges that besides his Miami Beach mansion, the entrepreneur illegally used investor money to pay for his Maserati, a Colorado mountain retreat home, and country club dues. He stole at least $8.1 million in investor funds.
"From his lap of luxury, the entrepreneur concocted a compelling story about InnoVida by recruiting an impressive board of directors and boasting a bogus financial condition to lure investors into funding his scheme of lies," said Eric I. Bustillo, Director of the SEC's Miami Regional Office.

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