SEC charges crypto exec over alleged $198 million fraud scheme involving Lamborghini purchases and 'Ponzi-like' payouts

The U.S. Securities and Exchange Commission charged PGI Global founder Ramil Palafox with orchestrating a fraudulent scheme that allegedly raised around $198 million from global investors and misappropriated more than $57 million of those funds.

The SEC's complaint , filed in the U.S. District Court for the Eastern District of Virginia, accuses Palafox of violating anti-fraud and registration provisions of federal securities laws.

According to the SEC, PGI Global claimed to be a crypto asset and foreign exchange trading platform promising high returns while offering multi-level-marketing-style referral incentives to attract new investors. From January 2020 to October 2021, the agency alleges Palafox misappropriated over $57 million to buy Lamborghinis and other personal luxury items, using the remainder of the funds to pay earlier investors in a "Ponzi-like" scheme until it collapsed.

"As alleged in our complaint, Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches and homes using millions of dollars of investor funds," Scott Thompson, Associate Director of the SEC's Philadelphia Regional Office, said in a statement on Tuesday. "We will continue to investigate and take action against bad actors who take advantage of investors with promises of guaranteed passive income and other lies and deceit."

"Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed," Laura D'Allaird added. "In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud."

D'Allaird leads the SEC's new Cyber and Emerging Technologies Unit . Launched in February, the unit is focused on protecting investors against fraud in crypto and AI. CETU replaces the Crypto Assets and Cyber Unit, which was created in 2022 under the former Biden administration.

The SEC is seeking permanent injunctions in the case, including bans on Palafox's involvement in the marketing of securities or crypto assets, alongside disgorgement of the alleged ill-gotten gains, prejudgment interest and civil penalties. The complaint also names BBMR Threshold LLC, Darvie Mendoza, Marissa Mendoza Palafox and Linda Ventura as relief defendants, seeking disgorgement of funds they allegedly received.

In a parallel action, Palafox was arraigned on criminal charges in U.S. District Court by the U.S. Attorney's Office for the Eastern District of Virginia. The SEC's ongoing investigation is being carried out with the assistance of the FBI and the IRS.