SEC Charges Alleged Ringleaders in Florida Prime Bank Investment Scam

September 23, 2013 — Investors trust sales agents and fund representatives to provide accurate information with which to make important investment decisions. But when agents and representatives lie to potential investors or make outlandish promises about expected returns, it is time to notify the financial fraud whistleblower program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Informants who collaborate with the Securities and Exchange Commission (SEC) about financial schemes involving phony prime bank investment scams may be compensated. Whistleblowers receive as much as thirty percent of the amount the government recoups, provided the recovery exceeds $1 million.

SEC Shuts Down Allegedly Phony International Trading Program

The Securities and Exchange Commission has filed charges against a lawyer in Miami, Florida and others in an alleged $3.5 million prime bank investment scheme involving 45 investors and a trading program that doesn’t actually exist.

A prime bank scheme entices investors to sink money into a phony international investing trading program by promising exclusivity and exorbitant profits. According to the SEC, Bernard H. Butts, Jr. served as an escrow agent to allow Fotios Geivelis, Jr., of Tampa, and his sham financial services firm, Worldwide Funding III Limited, to dupe investors with claims that they would receive as much as an $8.7 million return in just 15 to 45 business days on a comparatively modest initial investment of between $60,000 and $90,000. The men told investors that their funds would be used to cover bank charges to lease a standby letter of credit from a European banking group. The letters of credit would in turn be used to obtain loans, which funds would be placed in a securities trading program. That program would generate 14 percent weekly returns for 40 to 42 weeks.

Investors were allegedly told that their funds would be held in escrow until Worldwide Funding obtained the bank instruments needed to bring in the promised returns.

In reality, Butts allegedly paid out the investor funds nearly as quickly as they were received. Butts reportedly used the money to pay himself, sales agents and Geivelis, who spent the funds on gambling and travel. No letters of credit were acquired. No loans were obtained. And no returns were earned.

In addition to filing charges, the SEC also received an asset freeze on Butts’ and Geivelis’ accounts.

Whistleblowers Notify SEC of Prime Bank Investment Scams

Employees working for funds and investment firms are the most likely to discover phony schemes to defraud investors. Before notifying the SEC, insiders need to make certain that they understand their rights and protections under the Dodd-Frank whistleblower program. To maintain your anonymity, for example, you must work with an attorney. Otherwise, your identity will become public. The SEC fraud lawyers with Waters & Kraus know what it takes to protect whistleblowers’ rights in cases of fraud against investors. Contact us by email or phone our securities fraud attorneys at 855.784.0268 to learn how we can work together to do the right thing.

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