Sept. 21, 2023 — The SEC has taken action against Aras Investment Business Group S.A.P.I. de C.V., a Mexico-based company, along with its CEO Armando Gutierrez Rosas and four other individuals. These charges stem from their involvement in a fraudulent scheme that siphoned over $15 million from more than 450 retail investors in the U.S., primarily from the Mexican-American community.
The SEC’s Pursuit of Justice
In an impactful move, the SEC has lodged a formal complaint in the U.S. District Court for the Western District of Texas, revealing alarming details of the fraudulent activities that transpired between March 2020 and November 2021. During this period, Gutierrez targeted U.S. retail investors, enticing them with promises of substantial monthly returns, sometimes as high as 10 percent. However, the SEC’s investigation paints a starkly different picture.
A Deceptive Ponzi Scheme
The complaint asserts that none of the funds solicited from U.S. investors were channeled into legitimate investments, as promised. Instead, Gutierrez masterminded a Ponzi scheme, expertly concealing his actions behind the guise of affinity fraud. Shockingly, investor funds were misappropriated to cover Gutierrez’s personal expenses, including the acquisition of a lavish $2.5 million mansion in Texas.
The SEC’s pursuit of justice extends to those complicit in this elaborate deception. In addition to Gutierrez, the following individuals are also facing charges:
Accused of acting as an unregistered broker, Efren Quiroz played a central role in this scheme. His actions not only contravened registration provisions but also facilitated Gutierrez and Aras’s violations of antifraud provisions.
Similar to Efren Quiroz, Luis Quiroz acted as an unregistered broker, aiding and abetting Gutierrez and Aras in their antifraud violations. This concerted effort to deceive investors is a grave offense.
Maria Tolentino is implicated in aiding and abetting Gutierrez and Aras in their antifraud violations. Her involvement further compounds the severity of the alleged misconduct.
Diayanira Rendon, too, is charged with aiding and abetting Gutierrez and Aras in their antifraud violations. The SEC is leaving no stone unturned in its quest for justice.
Melissa R. Hodgman, Associate Director in the SEC’s Division of Enforcement, has expressed the Commission’s unwavering commitment to holding those responsible for affinity frauds accountable. This egregious fraud has inflicted losses exceeding $6 million on the unsuspecting investors.
The SEC’s complaint seeks a range of remedies to rectify the harm done, including permanent injunctions, civil penalties, and disgorgement with prejudgment interest. These measures are designed to ensure that those responsible face the consequences of their actions.
Consent and Settlements
While Efren and Luis Quiroz, Tolentino, and Rendon have neither admitted nor denied the allegations in the complaint, they have consented to judgments against them on all claims. These judgments include full injunctive relief against future violations, with disgorgement and penalties to be determined by the court, pending the Commission’s motion for approval. In addition, Efren and Luis Quiroz have agreed to Commission orders that bar them from association with registered entities and participating in penny stock offerings.
In response to these developments, the SEC’s Office of Investor Education and Advocacy has issued an Investor Alert. This alert offers valuable guidance to investors, advising them on how to safeguard their investments and avoid decisions based solely on common ties with individuals recommending or selling investments.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.