RIVERSIDE, CALIF. (CN) – The SEC charged five brokers for World Group Securities with fraud, claiming they talked people into refinancing their homes with subprime mortgages they could not afford to sell them unsuitable securities, while the brokers paid themselves fat commission on the mortgages and the securities purchases.
The defendants targeted people “of modest means (who) had little prior investment experience and had little or no formal education beyond high school.” The SEC said. “Some of the investors did not speak English fluently or at all.”
Charges with securities fraud are Guillermo Haro, Kederio Ainsworth, Jesus Gutierrez, Gabriel Paredes and Angel Romo.
The SEC says they sold unsuitable securities to customers, primarily variable universal life policies. Most of their victims lacked the cash or income to do so, so the brokers arranged for them to refinance their fixed-rate mortgages into subprime adjustable-rate negative amortization mortgages, the SEC says.
World Group Securities is based in Duluth, Ga.