SEC v. Richard DeMaria, Case No. 1:12-cv-04145 (N.D. Ill.).  On May 30, 2012, the SEC charged Chicago-area resident Richard DeMaria with fraud, alleging that he operated a prime bank scheme that defrauded at least thirteen investors out of approximately $4.3 million.  DeMaria lured investors by making misrepresentations in subscription agreements concerning investments in financial instruments that do not exist.  Instead of purchasing any financial instruments, DeMaria misappropriated virtually all of the victims’ funds, put them in bank accounts he controlled and spent them on himself.  DeMaria misappropriated at least $3.8 million of the investor funds, using over $2 million to fund his real estate business.  He also spent over $90,000 of investors’ money at a dealership that specialized in selling sports cars. DeMaria also used investor funds for travel and expensive meals.  He used approximately $460,000 of the remaining investor funds to form offshore entities and for supposed expenses related to the acquisition of a purported financial instrument.

When investors sought the return of their initial investments, DeMaria attempted to lull them with promises that a deal to acquire a financial instrument pursuant to the subscription agreements was imminent.  These promises were false.  When confronted by the SEC about his conduct, DeMaria invoked his rights under the Fifth Amendment.

DeMaria is charged with violating Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, and Section 10(b) of the Securities and Exchange Act and Rule 10b-5 thereunder.  The SEC is seeking civil monetary penalties, disgorgement and injunctive relief.