Epic Residences & Hotel with parties to the SEC Complaint (Epic, United States District Court)
A Miamian accused of running a $66 million payday loan scheme allegedly embezzled investor funds to fund his lavish lifestyle, including buying a 1.5-mile downtown condo million bucks.
The Securities and Exchange Commission has charged Efrain Betancourt Jr. with violations of securities laws in connection with fraudulently raising funds from at least 505 South Florida investors, many of whom are Venezuelan-Americans. The SEC on Monday filed a civil lawsuit against Betancourt and his Sky Group USA payday loan company.
The complaint does not specify the condo. But property records show Betancourt and his wife paid $1.5 million for Unit 5101 at the 54-story Epic Residences & Hotel in May 2019. The three-bedroom, three-bathroom unit totals 2,457 square feet. Ugo Colombo’s CMC Group developed The Epic in 2008 at 200 Biscayne Boulevard Way along the Miami River.
Betancourt and Sky Group’s attorney did not immediately respond to a request for comment.
From January 2016 to around March 2020, Betancourt allegedly sold unsuspecting investors promissory notes that he believed would be used to make payday loans, and promised them returns of up to 120% in one year, according to the report. complaint. Short-term loans were for small amounts, typically $10,000 to $150,000, to borrowers with little or no credit.
The investment opportunity has spread widely by word of mouth in the Venezuelan-American community in South Florida. While it’s unclear whether Betancourt is Venezuelan, an SEC press release says it’s common for scammers to take advantage of a common nationality to gain trust.
“Betancourt presented the investment in Sky Group as an excellent opportunity for members of the Venezuelan immigrant community to generate investment income,” according to the complaint.
About 20% of the money raised was used as Betancourt had promised. Meanwhile, $12 million was allegedly diverted to keep Sky Group running, and $9.8 million was used to pay commissions to 52 sales agents who were not registered brokers, according to the SEC. . Most of these fees were not disclosed to investors.
Among the lies Betancourt allegedly told investors was that Sky Group had a loan book of $70 million, as a way to present this as a safe opportunity. According to the SEC, at least one investor has been told they are expecting a windfall of $31 million.
When the scheme began to unravel in 2019, Betancourt reportedly told investors their repayments had been put on hold due to a problem with the provider handling Sky Group’s funding. The plot allegedly turned into a Ponzi scheme, according to the complaint, with at least $19.2 million of investors’ money used to pay other investors.
Betancourt used at least $2.9 million of investors’ money to enjoy a life of luxury, according to the SEC. This included his wedding in a castle on the French Riviera, vacations in the Caribbean and at Disney hotels, and work on his personal Piper plane.
A portion of that sum was also reportedly used to purchase the downtown Miami condo.
The 32-year-old’s friends and family also benefited, as $3.6 million was transferred to them for no apparent legitimate purpose, the complaint says.
Betancourt is not the first South Florida accused of fraud that included the diversion of funds to the area’s luxury real estate market.
In May, Dusko Bruer was sentenced to 24 months in prison for tax evasion and hiding $6.3 million from his profitable farm equipment company in offshore accounts. Bruer spent $1.6 million on a three-bedroom house in Lake Worth Beach on the Intracoastal Waterway for his then-girlfriend.
Bruer’s attorney at the time said Bruer had been the victim of a “playboy lifestyle”, but in the end he had earned his money rightfully, admitted his mistakes and pleaded guilty.
In one of the most notable links between real estate and fraud schemes, a unit at Sunny Isles Beach’s Porsche Design Tower was allegedly used as payment for one of the money launderers charged in 2018 in part of a $1.2 billion scheme to hijack Venezuela’s state-owned oil company. PDVSA.
