(HedgeCo.Net) Defendants allegedly used funds from deceased beneficiaries’ accounts on golf tournaments and beach parties. The Securities and Exchange Commission has announced fraud charges against Synergy Settlement Services, Inc., CEO Jason D. Lazarus, Esq., both based in Orlando, FL, and President Anthony F. Prieto, Jr. of Tampa, FL, for allegedly defrauding individuals with disabilities into believing that the individuals were placing their funds in a pooled trust managed by a non-profit association. According to the SEC’s charges, the defendants instead used a non-profit trustee as a shell company to profit from disabled personal injury victims.
The SEC alleges that Lazarus and Prieto formed the Foundation for Those with Special Needs, Inc. as a non-profit company to “assist personal injury victims with special needs.” The defendants, however, concealed from the beneficiaries, the Internal Revenue Service, and the Social Security Administration that they diverted at least $775,000 in trustee and joinder fees directly from the beneficiaries’ accounts to their for-profit business, Synergy. The SEC also alleges the defendants improperly used funds from deceased beneficiaries’ accounts to reimburse themselves, sponsor events and parties, and promote Synergy’s for-profit business. Synergy, Lazarus, and Prieto allegedly also did not tell beneficiaries they were investing beneficiaries’ money in a certain class of mutual fund that doubled the fees the beneficiaries were told they were paying.
“We allege that Synergy Settlement Services and its executives took advantage of vulnerable victims with special needs, making unethical and illegal profits off of them,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “The alleged greed Synergy and its executives displayed, treating themselves and clients to golf tournaments and beach parties using a sham non-profit company, betrayed the trust of their victims.”
The SEC’s complaint charges Synergy, the Foundation, Lazarus, Prieto, and Special Needs Law Firm with violating the antifraud provisions of the federal securities laws. The SEC’s complaint also charges Synergy, Lazarus, and Prieto with violating the registration provisions of the federal securities laws. The SEC seeks permanent injunctions and disgorgement of ill-gotten gains plus prejudgment interest against all defendants, and civil money penalties against all defendants except the Foundation.
The SEC additionally charged registered investment adviser True Link Financial Advisors, LLC, headquartered in San Francisco, CA, and its CEO, Kai H. Stinchcombe of Healdsburg, CA, in their role as investment and asset manager for the pooled trusts. True Link and Stinchcombe agreed to settle their case in a separate cease-and-desist proceeding without admitting or denying the findings that they caused certain violations of the antifraud provisions of the federal securities laws. True Link and Stinchcombe agreed to pay $200,000 and $20,000, respectively, in civil money penalties.
