SEC charges Harbor City Capital and its CEO with operating a Ponzi scheme

The Securities and Exchange Commission (SEC) has obtained a temporary restraining order and an asset freeze to stop an alleged Ponzi scheme and misappropriation of investor funds by Jonathan P. Maroney through several entities he controls.

The US watchdog has filed a complaint on 20 April against Maroney and his companies claiming they raised $17.1 million from over 100 people in a series of fraudulent securities offerings. The SEC alleges that Maroney, his company Harbor City Capital Corp., and other entities he owns told investors that offering profits would be used to finance Maroney’s online “customer lead generation campaigns,” and promised investors annual returns ranging between 10% to 60% from the resale of those leads to other businesses.

According to SEC, in reality, little if any investor money went to the lead generation business. The regulator stated that Maroney misappropriated $4.48 million of investor funds for himself and his family for purchases such as waterfront home and a Mercedes Benz, and to pay for his extensive credit card bills and renovation-related expenses on the house.

SEC fraud

SEC’s complaint further reveals that Maroney misused investor money by making payments to other entities unrelated to the supposed purpose of the offerings and that he fraudulently used investor funds to make monthly interest payments and other payouts to investors in a classic Ponzi scheme manner.

Eric I. Bustillo, Director of the SEC’s Miami Regional Office commented:

Eric I. Bustillo, SEC Miami

Eric I. Bustillo

As alleged in our complaint, Maroney lured investors with promises of double-digit returns and false claims, while pocketing millions of investor dollars for himself. Investors should be skeptical of any investment that promises extraordinarily high rates of return.

SEC charges the defendants with violating federal securities laws. The regulator’s complaint seeks emergency relief, which was granted by the court, preliminary and permanent injunctions, disgorgement, prejudgment interest, and a civil penalty from each of the defendants. SEC has also named Tonya Maroney, Maroney’s wife, and Celtic Enterprises LLC, another Maroney-controlled entity, as relief defendants for receiving profits from the alleged fraud. The Court has scheduled a hearing on 29 April to determine if a preliminary injunction should be entered and whether the asset freeze should remain in force for the duration of the litigation.

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