According to the SEC, Onix Capital and its owner Alberto Chang-Rajii defrauded investors in promissory notes that “guaranteed” annual returns of 12% to 19% and deceived others who were told their funds would be invested in promising start-ups.
The SEC’s complaint found Chang and Onix Capital sold more than $5.7m (£4.5m) in Onix promissory notes that they falsely claimed were guaranteed by Chang, and raised more than $1.7m that Chang promised to invest in companies such as Uber, Snapchat, and Square. However, the investor funds were instead diverted to Chang and used to pay other investors.
Chang and Onix Capital also are alleged to have falsely depicted Chang as an award-winning multi-millionaire “angel” investor with an MBA from Stanford University.
“According to our complaint, Chang and Onix Capital guaranteed returns and touted Chang’s wealth and investment success to entice investors,” said Eric I Bustillo, director of the SEC’s Miami regional office.
“However, Onix’s purported investment revenue was non-existent and Chang’s claims about his background were not true.”
Glenn S Gordon, associate director of the SEC’s Miami regional office, added, “Once the defendants’ alleged misrepresentations were exposed, they stopped paying investors and shifted millions of dollars of investor assets offshore.”
The scheme began to unravel in March when reports published in the US and Chile exposed the misrepresentations by Chang and Onix Capital. Chang fled to Malta and transferred approximately $4m, including Onix Capital investor funds, to banks in Malta, the UK, Switzerland, and Australia.
The SEC has sought the return of allegedly ill-gotten gains, prejudgment interest, and financial penalties, among other relief for investors, from Chnag and Onix Capital.
The SEC also requested a temporary asset freeze against Onix Capital, Chang, and various relief defendants.
A hearing is due to be set by the court.