The Securities and Exchange Commission (SEC) has ordered an emergency asset freeze against a Miami-based attorney and others involved in a “prime bank investment scheme” that promised exorbitant returns from a purported international trading program.
According to the SEC, prime bank schemes lure investors to participate in a phony international investing opportunity with bogus promises of exclusivity and massive profits.
Bernard H. Butts, Jr., acted as an escrow agent enabling Fotios Geivelis Jr. and his purported financial services firm Worldwide Funding III Limited, to allegedly defraud about 45 investors out of more than $3.5 million they invested in a trading program that didn’t actually exist.
Geivelis, who lives in Tampa and uses the alias “Frank Anastasio” with investors, claimed returns of approximately $8.7 million for investors within 15 to 45 business days on an initial investment of $60,000 to $90,000.
The SEC’s complaint, filed under seal on Aug. 29 in federal court in Miami, also charged three sales agents who Geivelis and Butts paid to sell interests in the scheme: Douglas J. Anisky of Delray Beach, Fla., James Baggs of Lake Forest, Calif., and Sidney Banner of Delray Beach, Fla., and his company Express Commercial Capital. The court granted the SEC’s request for an asset freeze on Aug.30, and the case was unsealed on Sept. 6.
“Geivelis attempted to add a twist of legitimacy to a classic prime bank scheme by using a long-time attorney as an escrow agent to give investors the false impression that their money was secure,” Julie K. Lutz, acting co-director of the SEC’s Denver Regional Office, said in a statement. “Meanwhile, Geivelis and Butts have misused investor funds and made lulling statements to investors that portray the sham trading program as successful and payments to investors as imminent.”
According to the SEC’s complaint, investors were lured through the Internet, telephone, and personal contact with promises of extraordinary profits. Investors were told their $60,000 to $90,000 investment would pay for bank charges to lease a standby letter of credit (SBLC) in the amount of 10 million Euros from a banking group in Europe. The SBLCs were to be used to acquire loans, and the funds from the loan were to be placed in a securities trading program. Investors were promised that after their initial profit of at least 6.6 million Euros within 15 to 45 business days, the securities trading program would generate a weekly return of approximately 14 percent for 40 to 42 weeks.
The SEC’s complaint charges all defendants with violations of the antifraud and securities registration provisions of the federal securities laws.
Although the SEC was expected to file significantly fewer civil fraud cases this year, the agency continues to make good on its promise to crack down on fraud in the financial sector. Earlier this month, the commission charged a money manager Ronald Feldstein with defrauding investors and brokerage firms.