LOS ANGELES (CN) - The SEC obtained an emergency order freezing accounts "holding money stolen from U.S. investors by Fleet Mutual Wealth Limited and MWF Financial - collectively known as Mutual Wealth," the agency said Wednesday.
The defendant companies "stole" $300,000 or more in a pyramid scheme "masquerading as a legitimate international investment firm," the SEC said in a statement announcing its federal lawsuit.
"Almost nothing Mutual Wealth represents to its investors is true," the SEC says in the complaint. "The company does not purchase or sell securities on behalf of investors. Rather, it diverts investors' money to offshore bank accounts held by shell companies. Its purported headquarters in Hong Kong does not exist. Its purported 'data-centre' in New York does not exist. The 'executives' it lists on its website do not exist. It is not, as it claims in emails to investors, 'registered' or 'duly registered' with the Commission.
"At least 150 U.S. investors have opened accounts with Mutual Wealth. Their investments to date total at least $300,000 and are growing by the day."
The defendants and relief defendants are incorporated in a dizzying array of foreign countries, according to the SEC lawsuit: MWF Financial Limited in Cyprus; Mutual Wealth in Panama and the United Kingdom "through Russian or Belarussian nationals," who allegedly divert investors' money to Latvia and Cyprus.
Relief defendant Risort Partners is a Panamanian company that diverted money to Latvia, the SEC says. Also named as relief defendants are Hullstar Capital; Camber Alliance; Kimrod Estate; and Midlcorp Trade, all of Great Britain.
The defendants promised returns of 2 percent to 3 percent a week, the SEC says. But it was a classic pyramid scheme, in which "investors" are told they can become "accredited advisors" if they recruit new suckers, the SEC said.
"Mutual Wealth used Facebook and Twitter as well as a team of recruiters to spread a steady stream of lies that tricked investors out of their money," an SEC enforcement official said in the statement. "Fortunately we were able to quickly trace the fraud overseas and obtain a court order requiring Mutual Wealth to shut down its website before the scheme gains more momentum."