On Septemaber 23, 2011, the Securities and Exchange Commission (SEC) charged Jason G. Rivera, Jr., Marc C. Harmon, and Rivera’s companies Joseph Rene Corporation (JRC) and Executive Members Management Group (EMMG) with fraud for luring investors into fraudulent schemes by promising returns on their investments as high as 6,300 percent. Rivera and Harmon are residents of Northern California. The case was filed in federal court in San Francisco.
The SEC claims that Rivera, formerly in real estate, portrayed himself to investors as a competent financer, raising over $8 million through two separate schemes. Rivera did not produce the promised results. Instead Rivera’s used investors’ money to finance personal interests including a $360,000 birthday bash for his spouse, approximately $1.5 million in improvements to his California mansion, luxury vehicles, jewelry and basketball season tickets.
The complaint alleges that, during the first scheme in 2007 and 2008, Rivera raised $4.5 million from investors by falsely promising extraordinary results with minimal risk. The SEC contends that Rivera misled investors by claiming their contributions would lead to “financial freedom” through low-risk investments in “hard assets” such as gold, oil and diamonds. Rivera typically gave investors unsecured, one-year promissory notes, which he drafted and signed on behalf of JRC. The promissory notes contained JRC’s logo and stated that JRC would pay back the investor’s principal plus interest at rates that varied by investor and ranged from 12 percent up to 35 percent annually.
By 2008, Rivera had depleted the investors’ account to approximately $300 by investing in unprofitable stock trades and financing his own personal and mortgage expenses. Rivera could not make payments on the promissory notes as promised and, therefore, he pacified investors by misrepresenting that their payouts, though delayed by banking system “glitches,” remained safe.
The SEC alleges that the second fraudulent operation began in 2008 when Rivera teamed up with Harmon. Rivera and Harmon, a former construction worker with no financial services background, induced investors from California and elsewhere to contribute approximately $3.2 million to the EMMG. Rivera and Harmon fraudulently represented to investors that their money would generate returns of up to 9,000 percent through a pooled program trading in financial products, specifically collateralized mortgage obligations, generating lucrative short-term profits. Rivera and Harmon falsely assured investors that EMMG utilized established trading programs and investment ventures that could garner profits within weeks. Rivera and Harmon had no factual basis for these contentions to their investors. Instead, Rivera and Harmon paid both their own personal expenses and disgruntled investors from the earlier scheme using EMMG funds.
The complaint contends that Rivera, Harmon, JRC and EMMG violated federal securities laws by unlawfully selling unregistered securities and conducting fraudulent transactions, as well as using manipulative and deceptive devices in the purchase and sale of securities. Additionally, Rivera is charged separately with engaging in prohibited fraudulent transactions as an investment advisor, while Harmon is charged with failing to register as a broker-dealer. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil monetary penalties.
If you suspect that your investments have been mishandled, contact Wittenberg Law for a confidential consultation.