Aggregated News From Investment Management Regulators

SEC Charges Newport Beach Company and its Principals with Operating a $13.5 Million Ponzi-Like Scheme

Report/Flag

Please complete the required fields.



Washington D.C., Oct. 29, 2021 —

The Securities and Exchange Commission today announced that it has charged BNZ, a Newport Beach, California-based company, and its co-founders and co-managers Brett Barber and Louis Zimmerle, for fraudulently raising $13.5 million from more than 100 retail investors.

According to the SEC’s complaint, filed on Oct. 28, 2021, in the U.S. District Court for the Central District of California, since June 2019, BNZ, Barber, and Zimmerle have raised $13.5 million from retail investors by telling them BNZ was in the business of making investments in real estate and alternative investments and promising to pay investors significant returns, generally 10% per year. The complaint alleges that the defendants used only $6.4 million of the $13.5 million raised from investors to invest in real estate and alternative investments, and those investments generated just $300,000 in profits. According to the complaint, despite generating minimal profits, the defendants paid investors returns of at least $1.7 million using funds raised from other investors in Ponzi-like fashion, and transferred over $1.6 million to Barber through his company, Guaranteed Income Solutions Inc., and over $700,000 to Zimmerle. According to the complaint, the defendants made false and misleading statements to investors regarding, among other things, the source of the payment of the investor returns.  In addition, Barber allegedly misled investors by touting his education in finance and his investment experience without also disclosing that he had been barred by the Financial Industry Regulatory Authority from affiliating with any member firm.

“The complaint here alleges that when defendants failed to earn sufficient profits in order to pay investor returns, they made Ponzi-like payments to investors using other investors’ money, and, separately, also used investor funds to pay themselves handsomely,” said Michele Wein Layne, Regional Director of the SEC’s Los Angeles Regional Office. “Individuals who engage in such misconduct should expect to be held accountable for their actions by the SEC.”

The complaint charges BNZ, Barber, and Zimmerle with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, violating the registration provisions of Sections 5(a) and (c) of the Securities Act, and, as to Barber and Zimmerle, violating the broker-dealer registration provisions of Section 15(a) of the Exchange Act. The complaint also charges Barber and Zimmerle as control persons of BNZ under Section 20(a) of the Exchange Act. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties from BNZ, Barber, and Zimmerle, and disgorgement with prejudgment interest from Relief Defendant Guaranteed Income Solutions.

The SEC’s investigation was conducted by staff in the SEC’s Los Angeles Regional Office, including L. James Lyman and Carol Kim, and supervised by Robert Conrrad. The SEC’s litigation will be led by Charles Canter and supervised by Amy Jane Longo. The SEC acknowledges the assistance of the FBI and the United States Attorney’s Office for the Central District of California. In a parallel action, the U.S. Attorney’s Office for the Central District of California announced criminal charges against Barber and Zimmerle.

This news item was originally published by the US Securities and Exchange Commission (SEC US). For more information, see the Source Link.

Regulator Information

Abbreviation: SEC
Jurisdiction: United States

Recent Articles

ASIC calls on industry to continue to improve resilience during market outages

ASIC is calling on market operators and participants to continue to implement its expectations to improve the resilience of the Australian equity market during...

ESMA will not publish August systematic internaliser regime data for non-equity instruments other than bonds and CTP data

The European Securities and Markets Authority (ESMA) will not publish the 1 August 2022 publication of the systematic internaliser (SI) regime data for non-equity...

Macroprudential decision: Recommendation on mortgage borrowers’ maximum debt-servicing burden – credit institutions’ capital requirements also reviewed

The Board of the Financial Supervisory Authority (FIN-FSA) recommends that housing loans in future be granted, as a rule, to loan applicants whose total...

ASIC wins appeal on Cigno and BHF Solutions Federal Court decision

ASIC has succeeded in its appeal before the Full Federal Court which has found unanimously that a ‘financial supply fee’ charged by Cigno Pty...

Quarterly stakeholder bulletin

Published on: 28 June 2022 The Isle of Man Financial Services Authority has issued the latest edition of its quarterly update for stakeholders.

Get the latest from Regulatory.News in your inbox!

×