Venezuelans in Miami Settle Charges Over Ponzi Scheme That Defrauded Investors For Over $3 Million, SEC Says

Two Venezuelan citizens living in Florida, Ricardo Javier Guerra Farias from Doral and Francisco Javier Malave Hernandez from Weston, were implicated in a $3.2 million fraud scheme targeting a group of investors, primarily Venezuelan-Americans. The Securities and Exchange Commission (SEC) accused the duo of orchestrating Ponzi-like payments through their entities, Toller Stern Financial and Toller Asset, noting that both Guerra and Malave have consented to financial penalties without admitting or denying the charges.

The alleged scheme promised investors annual returns of up to 72%, with investments purportedly allocated to cryptocurrencies, real estate, and equities, according to the Miami Herald. A Miami federal court, presided over by U.S. District Judge Jacqueline Becerra, recently issued a final judgment against the duo. Guerra is set to pay a total of $376,375, which includes his net profits of $147,152, $29,223 in interest, and a civil penalty of $200,000. Malave faces a more significant financial burden, totaling $916,987, which encompasses $558,900 in net profits, $158,087 in interest, and the same $200,000 civil penalty.

Additionally, Toller Stern Financial, associated with their activities, will pay $1,959,960, which includes $748,300 in net profits and a substantial civil penalty of $1 million. Overall, the total amount due to the SEC is $3,253,322, which must be paid by November 14, as reported by the outlet.

Malave previously served as the chief financial officer for Toller Stern Financial, which was established after AEG Logistics changed its name in April 2019. According to the SEC's complaint, Guerra and Malave began selling unregistered securities through an entity called "Toller Asset," promising annualized returns between 24% and 72%.

The investors, some hailing from South Florida and others from Venezuela, Spain, Argentina, and Portugal, were misled into believing their funds would be used for investments in cryptocurrency, real estate, and equities via a purported automated trading platform.

Despite claiming to manage approximately $20 million in assets with monthly returns of 4% to 10%, the SEC found that Toller Stern, Guerra, and Malave did not generate any profits. Instead, they reportedly used funds from new investors to pay returns to earlier investors, characteristic of a Ponzi scheme.

Payments ceased in the first half of 2022, yet Guerra and Malave continued to misinform investors about the situation, attributing the delays to banking issues and claiming accounts were frozen.

This case was investigated as part of the SEC Miami Office's Fraud Against Minority Groups Initiative, with attorneys John T. Houchin, Lina Fernandez, and Brian Lechich leading the investigation and litigation.

In June, New York Attorney General Letitia James sued two cryptocurrency companies, alleging they defrauded over $1 billion from thousands of victims, primarily Latino migrants and religious communities.

In March, the SEC expanded charges in a case against CryptoFX, which deceived more than 40,000 people, mostly Latinos in the U.S., into lending money with promises of significant profits from cryptocurrency investments.