SEC Obtains Emergency Order Halting Alleged Diamond-Related ICO Scheme Targeting Hundreds of Investors

The Securities and Exchange Commission today announced it has obtained a court order halting an ongoing $30 million Ponzi scheme targeting more than 300 investors in the U.S. and Canada. The SEC complaint unsealed Monday charges South Florida-based Argyle Coin, LLC, a purported cryptocurrency business, and its principal Jose Angel Aman with using investor funds to run a Ponzi scheme.

On May 20, the Honorable Judge Robin L. Rosenberg of the U.S. District Court for the Southern District of Florida granted the SEC’s request for a temporary restraining order and temporary asset freeze against Aman, Argyle Coin and other companies charged by the SEC as relief defendants. The court also appointed Jeffrey D. Schneider as a Receiver over Argyle Coin.

The SEC’s complaint alleges that Aman operated Argyle Coin as a Ponzi scheme — it used new investor funds to pay prior investors their purported returns.  As alleged, this fraud is a continuation of a scheme Aman orchestrated with two other companies he owns, Natural Diamonds Investment Co. (Natural Diamonds) and Eagle Financial Diamond Group Inc (Eagle).  According to the complaint, Aman engaged in unregistered offerings of securities in Natural Diamonds and Eagle as early as May 2014, falsely promising investors that the companies would invest in whole diamonds to cut down and sell for huge profits. Aman was assisted by Harold Seigel and Jonathan H. Seigel, who also have interests in Natural Diamonds and Eagle. According to the complaint, in October 2017, Aman and Jonathan H. Seigel continued the scheme by luring investors to invest in Argyle Coin, falsely claiming the investment was risk-free because it was backed by fancy colored diamonds, and promising to use investor funds to develop the cryptocurrency business. Instead, according to the complaint, Aman, Natural Diamonds, Eagle, and Argyle Coin, misused or misappropriated more than $10 million of investor funds to pay other investors their purported returns and for Aman’s personal expenses, including rent on his home, purchases of horses, and riding lessons for his son.

“As alleged, Aman operated a complicated web of fraudulent companies in an effort to continually loot retail investors and perpetuate the Ponzi schemes as well as divert money to himself,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “The SEC’s diligent investigative work uncovered the Ponzi schemes and our goal is to bring justice to the harmed investors.”

The SEC’s complaint charges Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel and Jonathan H. Seigel with violations of the securities registration provisions and also charges Natural Diamonds, Eagle, Argyle Coin and Aman with violations of the antifraud provisions of the federal securities laws. The SEC’s complaint seeks disgorgement of allegedly ill-gotten gains and prejudgment interest from Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel, and the relief defendants, and financial penalties against Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel and Jonathan H. Seigel.

The SEC’s investigation was conducted in the Miami office by Linda S. Schmidt with assistance from Kathleen Strandell, under the supervision of Glenn S. Gordon and Elisha L. Frank. The litigation is being led by Amie Riggle Berlin. The SEC appreciates the assistance of the Florida Office of Financial Regulation.

SEC Press Release

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SEC and CFTC Participate in the Signing Ceremony for the IOSCO Enhanced Multilateral Memorandum of Understanding Concerning Cross-Border Enforcement

At the 44th Annual International Organization of Securities Commissions (IOSCO) Conference in Sydney, Australia, the Chairmen of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission (CFTC) participated in a signing ceremony on May 15 for the IOSCO Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU).

IOSCO established its first enforcement Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information in 2002 (2002 MMoU). The 2002 MMoU created a framework for international information-sharing among securities and derivatives regulators to facilitate cross-border enforcement investigations, and now is widely viewed as the international benchmark for cross-border cooperation in enforcement matters. The 2002 MMoU currently has 123 signatories that have agreed to comply with minimum standards for obtaining and sharing with fellow signatories banking, brokerage and beneficial ownership information.  Both the SEC and the CFTC became signatories to the 2002 MMoU on December 19, 2002.

Since 2002, there have been significant changes in the complexity, sophistication and size of global financial markets, as well as in the technology used by market participants and regulators. These changes, along with the demonstrated success of the 2002 MMoU, led IOSCO to adopt the EMMoU.  Signatories of the EMMoU agree to new forms of assistance critical to effective enforcement, such as obtaining compelled testimony and obtaining asset freezes to protect customer funds, among other powers.

“As investment products, services and markets evolve, it is critical that the international community of securities and derivatives regulators continue to cooperate to protect investors from bad actors perpetrating fraud across borders,” said SEC Chairman Jay Clayton. “The SEC took an active role in negotiating and drafting the EMMoU with the intent of building upon the tremendous success of the MMoU in facilitating international cooperation. This signing demonstrates the SEC’s continued strong commitment to combatting securities and derivatives fraud against American investors – including fraud which is carried out outside our borders.”

“The CFTC is proud to be part of the inaugural group of signatories to the EMMoU and to demonstrate its commitment to international enforcement cooperation,” said CFTC Chairman J. Christopher Giancarlo. In today’s world of rapidly evolving technology and increasingly global financial markets, securities and derivatives violations frequently involve cross-border misconduct.  As a result, effective enforcement requires that regulators around the world ensure that they are able to cooperate fully with their regulatory counterparts to ensure that investors are protected, markets are safeguarded and wrongdoers are held accountable.”
 

SEC Press Release

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