PGI Global’s founder Ramil Palafox ran a multi-million crypto fraud scheme for more than a year, investigators at the Securities and Exchange Commission said recently.
The SEC announced it had charged Palafox for his part in a scheme that raised nearly $300 million from investors and for misappropriating more than $57 million of the investors’ funds. According to the SEC’s complaint, Palafox’s company, PGI Global, claimed to be a crypto asset and foreign exchange trading company that offered and sold membership packages promising high returns. Between January 2020 through October 2021, the scheme offered members multi-level-marketing-like referral incentives to recruit new investors.
However, the SEC said, Palafox misappropriated investor funds to buy Lamborghinis, items from luxury retailers and other personal expenses. Additionally, he used new investor funds to pay other investors purported returns and referral rewards until the scheme collapsed in late 2021.
“As alleged in our complaint, Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches, and homes using millions of dollars of investor funds,” Scott Thompson, associate director of the SEC’s Philadelphia Regional Office, said. “We will continue to investigate and take action against bad actors who take advantage of investors with promises of guaranteed passive income and other lies and deceit.”
The SEC charged Palafox with violating the anti-fraud and registration provisions of federal securities laws, and seeks permanent injunctive relief, conduct-based injunctions that prevent his from participating in MLM programs offering the sale of securities or crypto assets, disgorgement of ill-gotten gains and civil penalties.
“Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed,” Laura D’Allaird, Chief of the Commission’s new Cyber and Emerging Technologies Unit, said. “In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud.”