CEO Armando Gutierrez Rosas led a Ponzi scam that defrauded US investors, mostly Mexican-Americans, of $15 million.
Aras Investment Business Group S.A.P.I. de C.V. (Aras), a Mexican investment firm, has been charged by the Securities and Exchange Commission (SEC) for deceiving 450 US retail investors out of $15 million. Most of these belong to the Mexican-American populations.
Stephen T. Kaiser carried out the investigation with Margaret Vizzi’s help. The SEC is now looking to have Melissa Armstrong and Kaiser spearhead legal action against the company and its CEO, Armando Gutierrez Rosas. From March 2020 to November 2021, Gutierrez refrained from using investor capital for business improvement. Instead, he ran a Ponzi scheme and utilized the money to cover his own costs.
“This terrible scam that cost the investors more than $6 million was found through our investigation,” stated Melissa R. Hodgman, associate director of the SEC’s Division of Enforcement. “We are dedicated to holding those who promote these kinds of affinity frauds responsible.”
The $2.5 million Texas mansion that Gutierrez bought is one instance of financial mismanagement.
The CEO of the corporation is not the only one facing termination by the SEC. For their parts in the purported scam, Efren Quiroz, Luis Quiroz, Maria Tolentino, and Diayanira Rendon have all been charged.
The fees
In the SEC’s lawsuit, it is alleged that Gutierrez and Aras broke the federal securities laws’ antifraud and registration requirements. Along with Tolentino, Efren and Luis Quiroz are accused of working as unregistered brokers, breaking the registration requirements, and encouraging and abetting Gutierrez and Aras in their violations of the antifraud rules.
Rendon is also accused of encouraging and permitting Gutierrez and Aras to violate the antifraud rules. In its case, the SEC requests disgorgement with prejudgment interest, civil penalties, and permanent injunctions.
Not their first legal run-in
Aras had its first run-in with authorities in November 2021, but it wasn’t the SEC. Aras was given the order to stop funding in Mexico by the National Banking and Securities Commission (CNBV), a regulatory body in Mexico. This occurred as a result of the CNBV’s lack of records or protocols for requesting to be registered as a financial entity in the nation. It was consequently prohibited from raising money as an authorized fund raiser, fintech, or investment fund.
Finally, the regulator makes it quite evident that the company was not permitted to ask an unidentified person for resources.
Without confirming or refuting the accusations in the case, Efren and Luis Quiroz, Tolentino, and Rendon have now, in 2023, agreed to the entry of judgments against them with regard to all claims.
This comprises complete injunctive remedy to prevent future violations, with the court deciding on disgorgement and fines in response to a motion by the Commission.
Finally the settlements need to be approved by the court. Luis Quiroz and Efren also agreed to Settlement Commission rulings prohibiting them from being associated with a registered entity or taking part in penny stock offerings.
