Sunday, 1 February 2015
Last updated 1 day ago
Aug 15 2012 | 11:15am ET
The managers of an allegedly phony hedge fund have been hit with a Securities and Exchange Commission lawsuit.
The regulator accused Envit Fund "founder" Edward Laborio of using high-pressure, boiler-room sales tactics to garner $5.7 million from about 150 investors. Laborio's sales scripts included all manner of falsified information, including the claim that investors could double or triple their money and would receive quarterly dividends.
Laborio and one of his alleged co-conspirators, Jonathan Fraiman, also lied to potential clients about Envit's returns, which were non-existent because Envit never conducted any operations, the SEC said. Fraiman allegedly told one investor that Envit had returned 42.9% in 2006 and 43.7% in 2007—even though the hedge fund was not purportedly launched until the middle of the latter year.
Another alleged co-conspirator, Matthew Lazar, raised $585,000 through the sale of private investments in public equities, namely, Envit, promising a safe investment and a guaranteed 8.5% annual dividend.
The SEC suspended trading in Envit securities in May 2009, three months before the end of the two-and-a-half-year-long scheme. It is seeking disgorgements, civil penalties and industry bars against Laborio, Fraiman and Lazar in the lawsuit filed in Massachusetts federal court.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…