The SEC charged
a prominent Miami-based entrepreneur with defrauding investors by grossly
exaggerating the financial success of his company that purportedly produced
housing materials to withstand fires and hurricanes. The entrepreneur stole
nearly half of the money raised from investors to pay the mortgage on his
multi-million dollar mansion and other lavish highlife expenses.
The SEC alleges that
the entrepreneur, who is a former Ernst & Young Entrepreneur of the Year
award winner, raised at least $16.8 million from investors by portraying
InnoVida Holdings LLC as having millions of dollars more in cash and equity
than it actually did. He sometimes solicited investors one-on-one at political
fundraising events. According to the SEC, to add an air of legitimacy to his company, the
entrepreneur assembled a high-profile board of directors that included a former
governor of Florida, a lobbyist, and a major real estate developer. He falsely
told a potential investor he had invested tens of millions of dollars of his
own money as InnoVida's largest stakeholder, and he hyped a Middle Eastern
sovereign wealth fund investment as a ruse to solicit additional funds from
investors.
The SEC also charged
InnoVida's chief financial officer, a certified public accountant living in
Pembroke Pines, Fla., who helped the entrepreneur create the false financial
picture of InnoVida.
The SEC alleges that
besides his Miami Beach mansion, the entrepreneur illegally used investor money
to pay for his Maserati, a Colorado mountain retreat home, and country club
dues. He stole at least $8.1 million in investor funds.
"From his lap of luxury, the entrepreneur concocted a compelling story about InnoVida by recruiting an impressive board of directors and boasting a bogus financial condition to lure investors into funding his scheme of lies," said Eric I. Bustillo, Director of the SEC's Miami Regional Office.
For more information,
visit SEC Charges Prominent Entrepreneur in Miami-Based Scheme.
