SEC Claims Ponzi Scam Targeted Gay Investors

MIAMI (CN) - A 67-year-old man used "affinity fraud" to bilk gay investors in an $11 million Ponzi scheme, the SEC claims in court.

The SEC sued George Elia and his company, and sued 212 Entertainment Club and Elia Realty as relief defendants, alleging "affinity fraud."

"From March 2005 to January 2012, defendants George Elia and his company, International Consultants & Investment Group Ltd. Corp. ('International Consultants'), orchestrated a Ponzi scheme in which Elia raised approximately $11 million from approximately 25 investors," the SEC says in its 19-page complaint.

"Elia's scheme was, in part, an affinity fraud: a number of the investors were members of the gay community in Wilton Manors, Florida. Elia falsely told investors he had a long track record of day trading stocks and exchange traded funds to yield annual returns as high as 26 percent, and that his trading on behalf of investors was paying quarterly returns of up to 20 percent.

"However, in fact, Elia's trading resulted in losses or only marginal gains in limited time periods. Further, he misappropriated millions of dollars of investor funds, so any percentage returns he claimed could not have provided enough profits to pay all investors the returns he claimed. Elia transferred the funds to entities he controlled, including relief defendants 212 Entertainment Club Inc., and Elia Realty Inc. He also used some of the funds to pay personal expenses such as mortgage and car payments, and to pay an associate to introduce him to potential investors to sustain his Ponzi scheme. ...

"Elia, age 67, until recently resided in Oakland Park, Florida, but is believed to now reside in Cyprus. Elia has never been registered with the Commission in any capacity.

"International Consultants is a Florida corporation with its principal place of business in Fort Lauderdale. Elia was the corporation's president. Subscription documents for investment funds Vision Equities Funds II and IV described International Consultants as the funds' investment adviser or manager. International Consultants has never been registered with the Commission as an investment adviser.

"Elia Realty Inc. is a Florida corporation with its principal place of business in

Fort Lauderdale. Elia is its president and a director. Elia Realty received transfers of approximately $645,000 from International Consultants and Vision Equities Funds' bank and brokerage accounts. The fund transfers to Elia Realty occurred from the same accounts that received millions of dollars of investor funds. Elia transferred the funds to Elia Realty in dozens of separate transfers by check and internal bank transfers in amounts of several hundred or several thousand dollars, sometimes more than once a day, indicating that the transfers were not in exchange for goods or services Elia Realty provided to International Consultants or the Vision Equities Funds.

"212 Entertainment Club Inc. is a Florida corporation with its principal place of business in Fort Lauderdale. Elia is its president. 212 Entertainment Club received transfers of approximately $1.9 million from International Consultants and Vision Equities Funds' bank and brokerage accounts. The fund transfers to 212 Entertainment Club occurred from the same accounts that received millions of dollars of investor funds. Elia transferred the funds to 212 Entertainment Club in dozens of separate transfers by check and internal bank transfers in amounts of several hundred or several thousand dollars, sometimes more than once a day, indicating that the transfers were not in exchange for goods or services 212 Entertainment Club provided to International Consultants or the Vision Equities Funds."

The SEC seeks disgorgement, penalties and an injunction.

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