SEC Charges Michael Enea with Operating a Ponzi Scheme

SEC v. Michael R. Enea, Case No. 2:13-cv-01151 (E.D. Wis.).  On October 11, 2013, the SEC announced fraud charges against Michael R. Enea.  According to the SEC, Enea ran a Ponzi scheme from 2006 to 2013 in which he sold more than $2.1 million in unregistered offerings.  Enea told investors he would combine his funds with funds contributed by investors and use the money to invest in a “credit card portfolios” which he claimed were composed of a group of retail merchants who pay fees to a third party credit card processor each time one of the merchants’ customers makes a credit card transaction.  Enea told investors that they would get either monthly or quarterly payments that would come from the transaction fees by the merchants to the credit card processors.  The SEC alleges that Enea never bought credit card portfolios and instead used money from newer investors to pay about $1.35 million to older investors.  The SEC further alleges that Enea used the remaining money to pay for his personal and business expenses.  Enea never  disclosed to investors the true use of their money.  Lastly, the SEC alleges that Enea acted as an unregistered broker.  Without admitting or denying the charges, Enea has agreed to settle with the SEC by consenting to entry of an order permanently enjoining him from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder.  He has also agreed to pay disgorgement of $763,803, plus prejudgment interest of $79,317.

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