SEC Charges Two South Florida Men for Defrauding Venezuelan-American Investors in $5 Million Scheme
From the desk of Jim Eccleston at Eccleston Law
The Securities and Exchange Commission (SEC) has filed a complaint against two South Florida men, Francisco Javier Malave Hernandez and Ricardo Javier Guerra Farias, for orchestrating a multi-million dollar investment fraud that targeted members of the Venezuelan-American community. As reported by AdvisorHub, the duo operated through a fake financial advisory firm, Toller Stern Financial Services, raising nearly $5 million by selling fraudulent promissory notes.
The SEC’s complaint highlights this case as an example of affinity fraud, where perpetrators exploit trust within a community- here, based on shared ethnic identity. The SEC alleges that Malave and Guerra falsely promised investors that their funds would be invested in legitimate ventures, including equities, cryptocurrencies, real estate, and foreign exchange markets using an automated trading platform. However, no trading profits materialized.
Instead, Malave and Guerra misappropriated investor funds, using the capital for Ponzi-like payments to other investors and diverting significant sums for personal use—$558,900 by Malave and $109,500 by Guerra. They misled investors about the financial condition of Toller Stern and commingled funds between Toller Stern and a related entity, Toller Asset.
The scheme collapsed in early 2022 when the firm ceased making interest payments to investors. Without admitting or denying the SEC's allegations, Malave, Guerra, and Toller Stern consented to a settlement. The SEC is seeking $3.25 million in restitution and penalties.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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