Diamond Investment Scheme Ensnared Hundreds, SEC Says

WEST PALM BEACH, Fla. (CN) - A radio host and rare gem salesman has been slapped with a Securities and Exchange Commission complaint over claims that he and his associate siphoned away cash from investors whom they falsely promised big returns on diamond-cutting ventures and a fledgling cryptocurrency. 

In the civil enforcement action unsealed Monday, the SEC accused investment radio host Harold Seigel and his partner Jose Angel Aman of luring people into their investment programs by making bogus assurances of windfall short-term profits.  

More than 300 investors entrusted a combined $30 million to Seigel and Aman, at least a third of which has been "misused or misappropriated," the SEC claims. 

The SEC complaint seeks relief for securities fraud on multiple counts. The unsealed case documents show that a federal judge has frozen the assets of Seigel and Aman's companies at the commission's request. The pair's cryptocurrency firm Argyle Coin LLC's accounts are on lock per the judge's order.   

Seigel had gained media exposure over the years through his radio show-turned-podcast "World Financial Report." The Toronto native says he has been in the rare diamond business for more than 30 years and appeared on Fox, Bloomberg and CNBC. In one past Bloomberg TV segment, Seigel is seen touting a then-upcoming auction wherein he claimed to be selling Oprah Winfrey's pink diamond necklace and a custom piece designed by Elizabeth Taylor.

The diamond-industry veteran purportedly maintained a business office with Aman under the name Diamante Atelier on Palm Beach Island's posh Worth Avenue retail strip. 

The SEC claims that victims who invested with Seigel and Aman's company Eagle Financial Diamond Group were told their money would be put into rough diamond parcels that would be cut, polished and resold for a fast profit. Many were allegedly duped into believing their investments would double within two years. 

According to the complaint, more than $450,000 of Eagle Financial's corporate funds ended up being used "to purchase horses and horse riding lessons" for Aman's family member. Aman also allegedly used funds to make divorce settlement payments, cover his rent and shop at Gucci. He gave a million dollars of his companies' money to a local church, the SEC says  

The modus operandi for Seigel and Aman's company Natural Diamonds Investment Co. was similar, the complaint states. The alleged victims were told they would receive generous monthly interest checks until an underlying investment contract expired, typically within two years, at which point their principal would be repaid in full. 

One alleged victim, a veterinarian from Lloyd Harbor, New York, received his interest checks for about a year and a half before the money stopped coming and he realized he'd likely lost tens of thousands of dollars. 

Aman meanwhile used the Argyle Coin outfit to draw in money from new investors as past investors' money was being depleted, according to the complaint. Argyle Coin was marketed as a unique cryptocurrency that was backed by a performance bond and "$25 million+ in fancy colored diamonds." 

Eagle Financial remained the largest vehicle in the investment scheme, taking in more than $25 million, while Argyle Coin LLC collected more than $2.6 million from investors, the commission alleges. 

As of March 31, 2019, the defendant companies' accounts had a combined negative balance of roughly $120,000, the SEC says. 

Seigel's brother Jonathan is named as a defendant. He accused of aiding in the solicitation of investors.

The radio host mentioned on his investment advice broadcast last week that he was taking a sabbatical "due to unforeseen circumstances."

The Courthouse News database shows that investor lawsuits against Seigel's companies began trickling into Palm Beach County as far back as 2016. At least 10 investor claims against the companies have been filed in the county's circuit court. 

In one lawsuit, John McKay says he invested more than $230,000 with Seigel in 2015, in reliance on promises that the money would be allotted primarily towards a rough diamond processing venture. McKay says he had previously invested money with Seigel in 2009 and had no problems.  

After the repayment date on his 2015 investment came and went, McKay tried desperately to get his money back, to no avail. Eagle Financial "repeatedly strung McKay along," giving various excuses as to why he was not being repaid, according to the complaint.

By the summer of 2018, Seigel and his representatives had ceased nearly all communication with McKay, the lawsuit says.

Another lawsuit, filed by Anna and Don Geddes in early May, claims the couple lost hundreds of thousands of dollars that they entrusted to Eagle Financial and Argyle Coin. The couple had been assured their funds would be placed towards the cryptocurrency business and a stake in a rough diamond parcel supposedly worth $8.5 million. 

The Geddeses were supposed to be paid back in part with Argyle Coin cryptocurrency, which they came to find "had zero value and/or did not exist," according to the lawsuit. 

Though responsive pleadings are sparse so far, court records show that Jonathan Seigel in early 2018 mounted a defense against a lawsuit filed by one investor who said she was fraudulently induced to invest $100,000 with Eagle Financial. Jonathan claimed the lawsuit failed to present evidence that he and Eagle had ill intent in taking the money. Harold is not named as a defendant in that pending case.

The Palm Beach Post reported that Aman has turned over rough diamonds in 104 pouches to a corporate monitor appointed by the Southern District of Florida. The monitor says he is verifying the stones' authenticity in preparation for a sale to recover investor losses. 

Aman allegedly took a set of diamonds to a South Florida pawn shop and used them as collateral for a nearly million-dollar loan, shortly before the monitor was appointed. 

The judge's order unsealed Monday directed the pawn shop to hold any stones it received from Aman. The Winner's Church in West Palm Beach -- which received large donations from Aman -- is likewise required to hold onto funds it obtained from him. 

Attorneys for Harold Seigel and Natural Diamond Investment were not immediately available for comment Tuesday.  

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