A $1.6M Miami Ponzi scheme paid for private school, tennis lessons, nails, feds say
How did a Miami man afford private school tuition, tennis lessons, a Mercedes S-class sedan with only 13 miles on it, as well as services for nails and waxing?
According to the Securities and Exchange Commission, he ran a Ponzi scheme that lured $1.6 million from fellow South Florida residents of Serbian descent.
Dusan Varga neither admitted nor denied the charges in an SEC complaint. But Varga consented to judgments against him and his company, Pannon Investment Advisors, signed earlier this month by U.S. District Court Judge Beth Bloom that will require him to “pay disgorgement of ill-gotten gains, prejudgment interest ... and a civil penalty.”
The amount of disgorgement, interest and the civil penalty will be determined at a later hearing at the Wilkie D. Ferguson, Jr. U.S. Courthouse.
A half-mile away, at the Miami-Dade County Courthouse, Mercedes-Benz has sued Varga and his wife, Marina Merz, as it tries to repossess a 2023 Mercedes S-Class sedan. Mercedes says its repo man can’t get to the car because it can’t “in a peaceful manner” get into the parking garage of couple’s rented downtown Miami condominium. Mercedes says Varga and Merz leased the car in July 2023 with only 13 miles on it but began missing the $2,183 monthly payments.
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A month before Varga and Merz leased the Mercedes, an American Express lawsuit filed in Miami-Dade says, Varga and Pannon Investment stopped paying on an American Express Business Gold card and owed $26,675. That lawsuit got dismissed on Sept. 3 when Varga couldn’t be served within the time frame set by the court.
That was exactly four years after Varga registered Pannon Investment Advisors with the state of Florida, operating out of a 17th-floor apartment at the Palm Bay Yacht Condominiums, 780 NE 69th St.
Pannon, Ponzi and private school?
By the time Varga started Pannon, Miami-Dade court documents say he’d already defaulted on a 2018 consumer loan. Velocity Investments tried to issue a garnishment on his accounts at TD Bank to get its judgment for $15,164, but TD Bank found no Varga accounts.
Material given to investors and included in the SEC complaint claimed Pannon would trade stock options using a protective net-collar strategy to protect the downside.
SoFi explains on its website, “Protective collars provide inexpensive near-term downside risk protection on a long stock position, but the strategy also limits your upside.”
But, the SEC said, Pannon didn’t use the protective collar strategy and lied about Varga’s status as a registered securities broker (he wasn’t), about how investors’ money would be used and by claiming that investments remained liquid by being matched in an escrow account.
“In reality, there was no escrow account, [Pannon] made Ponzi-like payments to investors, and Varga misappropriated and commingled investor and client funds in his own personal bank and brokerage accounts,” the complaint said. “Rather than using investor and client funds to consistently trade covered stock options as promised to investors, [Pannon] often engaged in riskier, uncovered options trading that ultimately resulted in aggregate trading losses of over $200,000.”
Meanwhile, the complaint said, “Varga also paid for personal expenses with investor funds by making ACH electronic transfers and Bill Pay payments from the Pannon brokerage account.” These included:
▪ $2,900 at nail and wax salons.
▪ $4,600 for tennis lessons.
▪ $15,400 for private school tuition.
▪ $24,300 for “personal and luxury goods.”
▪ $40,000 for “auto-related expenses.”
▪ $64,200 in credit card payments.
In all, the SEC says Varga “misappropriated at least $260,300 of investor funds” for his own use.
The complaint says Varga used Pannon Investment to run the scheme until January, when it couldn’t use new investor money to pay obligations to previous investors, “initially blaming the delay in payment on processing issues with online bill pay services and banks.”
“Despite numerous redemption requests by investors, Varga and Pannon have failed to return investors’ principal funds,” the complaint says.
Melika Hadziomerovic and Lina M. Fernandez handled the SEC investigation out of the Miami office with the help of the Florida Office of Financial Regulation. Christine Nestor represented the SEC in court. David Weinstein of Jones Walker is representing Vargas and Pannon.
