Miami man charged with swindling $39 million from Venezuelans, bought luxury condo, feds say
A couple of years ago, Efrain Betancourt Jr. reached a settlement with federal regulators who accused him of using his payday loan business to swindle tens of millions of dollars from mostly Venezuelan-American investors in the Miami area, using the proceeds to pay for his European wedding, among other things.
A Miami federal judge ordered him and his company to pay back more than $39 million.
But since the settlement agreement that he and his company, Sky Group USA, struck with the Securities and Exchange Commission, the investors have continued to get stiffed, according to federal authorities.
During the alleged “Ponzi scheme” that began in 2016, Betancourt spent $7.5 million of investors’ money for his personal use, including on his extravagant wedding at a chateau on the French Riviera, Caribbean vacations, expensive jewelry, a private plane and a luxury high-rise condo on Biscayne Boulevard, authorities say.
Earlier this month, the 36-year-old, Venezuelan-born businessman was arrested by FBI agents at Miami International Airport upon his return from Colombia. Betancourt now faces a seven-count indictment charging him with conspiracy and wire fraud involving Sky Group’s sale of $66 million in promissory notes to more than 600 investors with promises of double- and triple-digit annual returns.
Some investors were paid back in part, but most were not, leaving a debt of more than $39 million, according to federal prosecutors in Miami.
Alleged Ponzi scheme
Prosecutors have accused Betancourt, whose Miami business employed dozens of sales agents, of running a Ponzi scheme by using new investors’ money to pay off old ones until the alleged scheme collapsed during during the COVID-19 pandemic in 2020.
A Miami lawyer representing three investors who won civil arbitration cases against Betancourt said he wasn’t surprised by the indictment, only that it took so long after he brought the investment scheme to the SEC’s attention four years ago.
“He never paid a dime to resolve the claims,” attorney Richard Diaz told the Miami Herald on Tuesday. “My clients and I are looking forward to personally attending his sentencing to express to the judge the gravity of his greed and fraud, which economically devastated, not just hurt, many families.”
A week ago, Miami Magistrate Judge Jonathan Goodman granted a $1.25 million bond for his release from a federal lock-up that would be co-signed by his father and another relative. But prosecutors got that decision put on hold while they appeal it to U.S. District Judge Darrin Gayles, arguing that Betancourt poses a flight risk to Colombia, where he has citizenship and has been living in recent years.
Prosecutors: Millions have vanished
Prosecutor Roger Cruz wrote in court papers that “millions of dollars in fraudulent proceeds directly obtained by this defendant have disappeared, were funneled by him to his wife and other family members, and have otherwise been transferred oversees.”
Cruz noted Betancourt is a Colombian citizen with a Colombian passport who has done significant international travel and owns real estate and other assets there. In particular, Cruz cited evidence that Betancourt “not only voiced his desire to avoid prosecution and arrest for this matter, but traveled to the UAE [United Arab Emirates] in search of a country that disallows extradition to the United States.”
Betancourt’s defense attorney, Dustin Tischler, said he could not comment about the case because he was out of the country. But he defended his client’s right to a bond before trial, saying the magistrate judge’s “decision was well founded by the evidence presented at the original bond hearing” on Nov. 19.
In court papers, Tischler said his client has longtime ties to the Miami area. He said prosecutors failed to point out that Betancourt has been a U.S. citizen for more than 20 years, owns a condominium in Miami, graduated from a local high school, and that his Colombian passport was confiscated during his arrest.
In addition, Tischler said Betancourt previously cooperated in the federal SEC case in Miami “related to the same allegations as charged in the indictment and was fully aware that future criminal charges were a possibility.”
Yet, Betancourt continued to travel and maintain his residence in Miami; he even attended law school at the University of Dayton Law online and attended the graduation ceremony in May of this year, Tischler said.
Gayles, the federal judge handling the Betancourt case, put his bond on hold until he hears the government’s appeal.
Annual returns of up to 120 percent
According to the indictment, Betancourt offered promissory notes to hundreds of Sky Group investors with yearly returns ranging from 24 to 120 percent. He and his sales agents told investors their funds would be used to disburse payday loans to Sky Group clients.
Interest from the clients’ loans would then purportedly be used to repay investors, according to the indictment. However, millions of dollars from investors were used to pay previous investors as part of the Ponzi scheme.
In their agreements with the SEC, Betancourt and Sky Group consented to securities violations without admitting or denying the allegations in the agency’s civil complaint. As part of the agreement, both were banned from trading securities. Sky Group was ordered by a federal judge to pay investors more than $39 million. Betancourt was ordered to pay $6 million toward that amount.
In September of 2021, the SEC in Miami filed a civil lawsuit against Betancourt and his company, accusing them of committing securities violations in a scheme that authorities described as “affinity fraud.”
Betancourt’s alleged scheme lasted for nearly five years until countless borrowers defaulted on their payday loans during the pandemic; his company, Sky Group, incurred a severe cash-flow problem and was unable to make interest payments on investors’ promissory notes.
Invokes Fifth Amendment
In December of 2021, Betancourt gave a deposition in one of several related arbitration cases in which he repeatedly invoked his Fifth Amendment right against self-incrimination while under questioning.
In a previous deposition, Betancourt admitted that he did not have law and computer engineering degrees in the United States. But he insisted that his payday loan business was legitimate, despite charging interest rates much higher than Florida’s annual cap of 18 percent.
He also said that the people who invested in his company were “lenders” involved in financing short-term, high-interest loans. He called them “business transactions.”
“I made it very clear that they were investing into a payday portfolio,” Betancourt said in a May 2021 deposition. “Now the payday portfolio has risks.”
Buys luxury condo at Epic: feds
In reality, according to the SEC, Betancourt misappropriated investors’ money for his personal use, including costs associated with buying a luxury Miami condominium at Epic Residences on Biscayne Boulevard and for service on his personal Piper airplane, SEC officials said.
Betancourt was also accused of transferring at least another $3.6 million to friends and family, including his ex-wife, Angelica Betancourt, and to EEB Capital Group LLC for “no apparent legitimate business purpose,” according to the SEC.
That company’s bank accounts were controlled by Efrain Betancourt and his current wife, Leidy Badillo, the complaint said.
In a SEC settlement in 2022, EEB Capital agreed to pay $2.2 million toward the judgment against Sky Group and Efrain Betancourt.
Angelica Betancourt argued that she only earned an annual salary of $60,000 from the payday loan company, according to court records. But in 2022, she also agreed to pay about $1.1 million toward the judgment against Sky Group and her ex-husband..
This story was originally published November 26, 2024 at 4:42 PM.
