Two Bay Area men were charged Friday with defrauding investors of nearly $8 million by claiming to offer extremely high returns as high as 6,300 percent.
The Securities and Exchange Commission charged Jason G. Rivera, Jr. and Marc C. Harmon with violating U.S. securities laws and is seeking an order prohibiting them from future violations and a requirement that they return their ill-gotten gains and pay penalties, SEC officials said today.
Rivera, who had previously worked in real estate, allegedly raised around $4.5 million in 2007 and 2008 through his company the Joseph Rene Corporation by telling investors their money was being placed in assets such as real estate, oil, diamonds and gold.
He later teamed up with Harmon, an unemployed construction worker, and raised an additional $3.2 million from 2008 through 2010 through a second company, Executive Members Management Group. The pair promised investors returns of up to 6,300 percent by trading in financial instruments including collateralized mortgage obligations.
The pair allegedly made numerous false claims to investors. However, instead of making payments to investors as promised, Rivera allegedly used the money to finance automobiles, jewelry, restaurant meals and basketball season tickets, among other luxuries, as well as more than $2.6 million in improvements to his 8,000 square foot home in Alamo. He allegedly paid Harmon $180,000.
“The spectacular returns offered by Rivera and Harmon turned out to be bait for a fraud,” said Marc Fagel, director of the SEC’s San Francisco Regional Office. “Investors should be wary of those claiming they can deliver quick riches with flashy trading strategies.”
Sara Gaiser, Bay City News
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