On Thursday, the Securities and Exchange Commission (SEC) announced it had charged 17 people for their roles in a $300 million crypto asset Ponzi scheme targeting the Latino community across the United States and in two other countries.
The charges stem from the SEC’s previous emergency action in September 2022 around Houston-based CryptoFX and its two main principals, Mauricio Chavez and Giorgio Benvenuto. Officials said the scheme targeted more than 40,000 predominantly Latino investors.
“We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from ‘risk free’ and ‘guaranteed’ crypto and foreign exchange investments,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said. “In the end, the only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across ten states and two foreign countries. A scheme of that size requires lots of participants, and as today’s action demonstrates, we will pursue charges against not just the principal architects of these massive schemes, but all those who further their fraud by unlawfully soliciting victims.”
According to the SEC’s complaint, CryptoFX told investors it traded in crypto assets and on foreign exchange markets, but was in reality a Ponzi scheme. From May 2020 to October 2022, SEC officials said, 17 individuals from Texas, California, Louisiana, Illinois, and Florida solicited investors by promising that CryptoFX’s crypto assets and foreign exchange trading would generate returns between 15 and 100 percent. Additionally CryptoFX raised more than $300 million from investors but CryptoFX employees used the funds to pay returns for other investors, pay commission and pay themselves, and give themselves bonuses rather than invest the funds into investment assets.
Two of the defendants, spouses Gabriel and Dulce Ochoa, continued to solicit investments after courts ordered CryptoFX to cease operations in September 2022, officials said. Gabriel Ochoa also instructed two investors that they would have to rescind their complaints to the SEC in order to recover their investment, officials alleged. Another defendant, Maria Saravia, is alleged to have told investors the SEC’s lawsuit in regard to CryptoFX was fake.
The SEC complaint, filed in U.S. district Court for the Southern District of Texas, charges Gabriel and Dulce Ochoa, Saravia, Gloria Castenada, Ismael Zarco Sanchez, and Roberto Zavala with antifraud violations, securities registration violations, and broker-registration provision violations. The complaint also charges Gabriel Arguelles, Hector Aquino, Orlin Wilifredo Turcios Castro, Carmen De La Cruz, Elizabeth Escoto, Reyna Guiffaro, Marco Antonio Lemus, Juan Puac, Luis Serrano, Julio Taffinder, and Claudia Velazquez securities-registration and broker-registration violations. Additionally, Gabriel Ochoa was charged with whistleblower protection violations.
The SEC is seeking permanent injunctions, disgorgement with pre-judgement interest and civil penalties against each defendant.