Loans

SEC: Payday loan scheme bilks investors out of millions

The owner of a Miami-based payday loan company has pulled hundreds of investors out of millions of dollars and repaid others with money he got from a Ponzi scheme, according to a press report and federal regulators.

The Miami Herald reports that about 500 investors, many of them from the Venezuelan-American community in South Florida, have been absorbed by Evren Betancourt Jr.’s high-return sales offers on their investment in Sky Group USA’s short-term lending operation.

The report noted that the Miami Securities and Exchange Commission filed a lawsuit against Betancourt, 33, and his company in September. The agency accuses Betancourt of committing securities violations in a scheme that authorities describe as “convergence fraud.”

In addition to the SEC’s complaint, six other lawsuits and arbitration cases have been filed against Betancourt, according to the newspaper. He has not been criminally charged.

Betancourt spent part of the $66 million raised in promissory notes on a lavish lifestyle that included a waterfront apartment in Miami and a wedding for his fourth wife in Monaco, according to a Securities and Exchange Commission complaint. It also accuses him of funneling money to his ex-wife and friends and using at least $19 million from a Ponzi-style scheme to pay interest to some investors to keep them at bay.

The SEC complaint says Sky Group and Betancourt falsely informed investors that the company would only use investor funds to provide payday loans and cover the costs of those loans. They promised annual rates of return of up to 120% on the notes.

“We continue to caution investors against any investment that promises returns too good to be true,” Eric I. Bustillo, director of the SEC’s Miami regional office, told the Herald.

The SEC seeks permanent injunctions and monetary fines.

The plan ran from January 2016 to March 2020, before the coronavirus pandemic began, according to the complaint, which says that when countless borrowers defaulted on payday loans, Sky Group faced an acute cash flow problem and was unable to make its interest payments. on promissory notes for investors.

Court records and legal documents indicate that Betancourt falsely claimed to have law and computer engineering degrees in the United States.

The Herald reported that Betancourt repeatedly invoked his Fifth Amendment right against self-incrimination during testimony earlier this month with a lawyer representing former clients. In his affidavit with the same attorney in May, he admitted that he did not have law and computer engineering degrees in the United States. But he insisted his payday loan business was legitimate, and called the investors “lenders” who were involved in financing short-term, high-interest loans, which he called “business transactions.”

“I made it clear that they were investing in a payday portfolio,” Betancourt told attorney Rick Diaz.

In a motion to dismiss the complaint, Betancourt’s attorney, Mark David Hunter, said promissory notes are loans, not securities, like stocks and bonds. So, Hunter said, Betancourt and Sky Group did not break the law when they failed to repay loans to lenders.

Diaz described Betancourt as “Madoff’s mini”, referring to the late New York financial advisor, Bernard Madoff, who ran the largest Ponzi scheme in US history.

“I’ve dealt with, isolated and advocated Ponzi schemers over the years,” he told the Herald. Evren Betancourt is the smoothest, rudest, most arrogant, selfish, and narcissistic of them all.

Andres Zorilla, Diaz’s client, told the newspaper he became suspicious when Betancourt declined his calls and ignored his emails when he tried to withdraw $30,000 from his investment in the company to help cover his mother’s medical expenses. One of his emails included a picture of his mother showing stitches from brain surgery.

“The man was just stealing money,” Zorella, 38, said, adding that he also referred his wife, brother and several other business partners to Betancourt. All together, Zorella and his immediate family invested $150,000 in the company. They received some interest payments, but lost all of their capital.

“He made a lot of money and got a little crazy with money,” Zorella said.

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