Markets Wired

The Securities and Exchange Commission announced fraud charges against recidivist David Sims, his partner, Mario Procopio, and three companies they controlled for defrauding investors in a “prime bank” scheme. The SEC also charged their lawyer, Ralph Craig Greaves, with aiding and abetting their scheme.

According to the SEC’s complaint, Sims, of Costa Mesa, California, and Procopio, of Newport Beach, California, operated a fraudulent scheme that raised over $1.4 million from investors. To entice potential investors, Sims and Procopio allegedly falsely claimed investors’ money would be invested in “prime bank” financial instruments that would generate astronomical returns of 1,200% to 40,000%. The SEC further alleges that Sims and Procopio also falsely told investors they had special access to trade platforms used by governments, corporations, and wealthy investors to buy vast sums of currency, usually $500 million or more, at a discounted price. Sims and Procopio allegedly told investors they could “piggyback” their money on these large trading platforms and reap huge returns with “absolutely no risk.” However, neither the financial instruments nor the trading platforms existed. In actuality, Sims and Procopio allegedly used nearly all of the investor funds for their own personal expenses, including cars, jewelry, travel, and golf outings. The SEC’s complaint further alleges that Greaves, their San Diego based lawyer, aided and abetted their scheme by, among other things, allowing investors to deposit money into his attorney trust account, which gave the scheme a cloak of legitimacy. Greaves then allegedly transferred most of these funds to Sims and Procopio despite knowing that they were misleading investors.

The SEC’s complaint, filed in the U.S. District Court for the Central District of California, charges Sims, Procopio and the entities they controlled, ALC Holdings, LLC, El Cether-Elyown, and SIMS Equities, Inc., with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. It also charges Greaves with aiding and abetting these violations.

For more information regarding the dangers of prime bank schemes and tips on how to avoid them, see the “Investor Alert: ‘Prime Bank’ Investments Are Scams.”

The SEC’s investigation was conducted by Matthew Montgomery and supervised by Finola Manvelian. The litigation will be led by Douglas Miller and Amy Jane Longo.