On July 2, 2015, the SEC froze a fraudulent venture headed by DFRF Enterprises, its leader, and six promoters.
The SEC alleges that DFRF Enterprises operated a Ponzi scheme by promoting and selling membership interests in over 50 Brazilian and African gold mines. The company recruited investors by promising large profits on fully insured funds used to mine gold. The company further claimed that 25% of all profits would be used for African charity work.
DFRF Enterprises marketed the Ponzi scheme by asserting that the company was registered with the SEC and that the gold mine stock would be publicly traded.
However, instead of using investor funds in Brazilian and African gold mines, the company, its leader, and promotors sold membership interests to investors through private meetings held in homes, businesses, and hotel rooms. Newly recruited members’ investments were paid to long-term members.
In 2014, the company illegally raised over $15 million from at least 1,400 investors, most of which lived in Spanish and Portuguese-speaking neighborhoods in Florida and Massachusetts.
The leader of DFRF Enterprises withdrew more than $6 million to purchase multiple personal luxury cars.
John Dugan, the SEC’s Associate Regional Director in Boston, said the defendants in the SEC’s complaint “preyed on investors in particular ethnic communities who stand to lose millions of dollars.” Dugan further asserted that DFRF Enterprises, its leader, and promoters were not honest with investors about the value and security of their funds.
The SEC’s complaint alleges that all defendants violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and registration provisions Section 5(a) and 5(c) of the Securities Act.
If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.