The head of a purported hedge fund is being sanctioned in a settlement with the U.S. Securities and Exchange Commission (SEC), which alleged that the fund actually operated as a Ponzi scheme.
The SEC filed settled charges against Francisco Javier Sarabia, the co-founder and president of Bonanza Global Solutions LLC, which allegedly raised over US$5 million from investors between February 2022 and March 2023 in unregistered offerings promising returns from equity trading, foreign exchange trading and oil and gas investments.
The scheme was touted on the company’s websites and in a series of YouTube videos, regulators said.
In its complaint, which was filed in the U.S. district court in the central district of California, the regulator alleged that, “Sarabia misled investors with false claims about how Bonanza Global would use investor funds, about the safety of investing with Bonanza Global and about the ‘money back guarantee’ he promised to investors.”
In fact, the SEC said that the fund was a Ponzi scheme, which didn’t make any investments, and instead used investors’ money to pay returns to earlier investors, to pay promoters for bringing in new money, and on personal spending, including luxury travel and shopping.
“Sarabia and his business partner lived a lavish lifestyle at the expense of their investors and, by March 2023, Bonanza Global had run out of money,” the SEC alleged.
Sarabia consented to the entry of the final judgment, which is subject to court approval, imposes permanent injunctions on him, and requires him to disgorge over US$1 million.