A U.S. court ordered over US$7 million in disgorgement and penalties against the operators of an alleged Ponzi scheme.
The U.S. district court for the Southern District of Texas issued a final judgment against John Fernandez and a pair of companies where he was founder and CEO — Avail Progression, LLC, and Elite Generators, LLC — which the SEC alleged breached securities rules in connection with a foreign exchange trading scheme.
Specifically, the SEC alleged that between February 2017 and October 2021, Fernandez raised at least US$4.3 million from investors by selling promissory notes and investment contracts in his companies in a scheme that promised investors guaranteed profits from forex trading.
Instead of trading investors’ money as promised, the SEC alleged that Fernandez used most of the money raised from investors to pay returns to earlier investors, and for personal expenses.
By 2019, the SEC alleged that Fernandez was using payday loans that charged annual interest rates as high as 38% to make Ponzi return payments to investors.
The final judgment orders over US$5 million in disgorgement, plus US$1.6 million in interest, against all of the defendants, and ordered a civil penalty of US$472,902 against Fernandez.
The court also imposed a permanent injunction against the defendants, and banned Fernandez from participating in an offering of securities, and from serving as a director or officer of a public company.