Markets Wired

The Securities and Exchange Commission today charged a Long Island, New York man and a New York limited liability company with defrauding investors of over $19 million in a securities offering fraud.

According to the SEC’s complaint, filed in federal court in Manhattan, Paul Andrews Rinfret perpetrated a multimillion dollar offering fraud scheme by falsely telling investors that they were investing in a successful trading strategy with a proven track record of triple digit returns. In truth, the complaint alleges, Rinfret’s trading strategy consistently lost money, and Rinfret used millions of dollars of investor funds for personal living expenses, extravagant vacations, lavish parties, jewelry and other luxury goods.

Rinfret, as alleged, defrauded at least five individuals out of a total of $19.3 million by selling them limited partnership interests in Plandome Partners LP, a purported investment fund operated by Rinfret and Plandome LLC. According to the complaint, Rinfret told investors that their money would be used to trade in S&P 500 futures contracts and foreign currency, and materially misrepresented the fund’s current performance, historical track record, trading strategy, and assets under management. To cover up his scheme and obtain additional investments, Rinfret sent investors fabricated monthly account statements, which showed large profits from trading that either never occurred or, in fact, had resulted in substantial losses.

The SEC’s complaint charges Rinfret and general partner, Plandome Partners LLC, with violating the antifraud provisions of the federal securities laws, 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. The complaint names Plandome Partners LP as a relief defendant.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Rinfret.

The SEC’s continuing investigation is being conducted by Ladan Stewart, Douglas Smith, and George Stepaniuk. The litigation will be led by Christopher Dunnigan and Ladan Stewart. The case is being supervised by Lara Shalov Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Department of Homeland Security.