Miami men will pay $1.29 million after alleged fraud targeting Miami Venezuelans
Two Venezeulan citizens living in Doral and Weston pulled a fraud that included what federal lawyers called “Ponzi-like” payments on a group of investors, most of whom were Venezuelan-Americans, the Securities and Exchange Commission said.
While Doral’s Richardo Javier Guerra Farias and Weston’s Francisco Javier Malave Hernandez officially neither admit or deny the SEC’s charges, they consented to the financial punishment in the final judgment signed last week in Miami federal court by U.S. District Judge Jacqueline Becerra.
Guerra will pay $147,152, the net profits from the scheme, plus $29,223 of interest and a civil penalty of $200,000. Malave’s net profits will have him paying $558,900, $158,087 in interest and a $200,000 civil penalty.
Toller Stern Financial, based on Brickell Avenue during the actions in the SEC complaint, will pay $748,300 in net profits, $211,660 in interest and a $1 million civil money penalty.
All of that money, $3,253,322, will be paid to the SEC by Nov. 14. Also, Guerra and Malave are banned from being officers or directors at any company that issues securities.
State records say Malave was chief financial officer when AEG Logistics changed its name to Toller Stern Financial on April 2, 2019.
MORE: Court rules in favor of Florida hotel developer Azpura accused of fraud by his investors
Money men
That’s the month the SEC says Malave and Guerra, who owned an entity called “Toller Asset,” started selling “unregistered securities in the form of the Notes with promised annualized returns of 24 to 72 percent. Many of the investors were members of the South Florida Venezuelan-American community, but also included investors in Venezuela, Spain, Argentina, and Portugal.”
Investors were told that Toller Stern would use the money on crypto assets, real estate, equities and other investments via an automated trading platform that may or may not have existed. Malave and Guerra, the SEC complaint says, told potential investors that Toller Asset functioned as an asset management fund that invested in crypto, equities, foreign exchange and a hotel in Greece.
“Malave and Guerra claimed they had approximately $20 million in assets under management with monthly returns ranging from 4 to 10 percent,” the complaint said.
“In reality, Toller Stern, Malave, and Guerra never received any trading profits or money back from the trading platform,” the complaint said. “Further, they commingled Toller Stern and Toller Asset investor capital and used the commingled funds to make Ponzi-like payments to other investors. Malave, directly and indirectly, misappropriated $558,900. Guerra misappropriated at least $109,500. [Malave and Guerra] also misled investors about Toller Stern’s and Toller Asset’s financial conditions and operations.”
Ponzi-like payments eventually stop and these investors stopped seeing payments during the first six months of 2022.
“Even then, [Malave and Guerra] continued to lie to investors about the ceased payments, including blaming the late payments on a banking issue, and later claiming their accounts were frozen (but unable to explain why),” the complaint said. “Ultimately, (they) disclosed to some investors that a colleague in South America, who was purportedly operating the trading platform, had lost or stolen investors’ money.”
This case was part of the SEC Miami Office’s Fraud Against Minority Groups Initiative. John T. Houchin and Lina Fernandez handled the investigation and Houchin and Brian Lechich handled the litigation.
This story was originally published October 22, 2024 at 7:11 AM.
