SEC Charges Mexico-based Company, its CEO, and Four Individuals in Ponzi Scheme Targeting Spanish-Speaking U.S. Investors

The U.S. Securities and Exchange Commission (SEC) has made a significant announcement concerning Aras Investment Business Group S.A.P.I. de C.V., a Mexico-based company, its CEO Armando Gutierrez Rosas, and four individuals. The charges revolve around an elaborate fraud scheme that saw the fraudulent raising of at least $15 million from over 450 retail investors in the United States, with a substantial portion of these investors being members of the Mexican American community.

In its official complaint, which was filed in the U.S. District Court for the Western District of Texas, the SEC outlines that between approximately March 2020 and November 2021, Armando Gutierrez solicited funds from U.S. retail investors under the guise of investing in U.S. real estate and mining ventures in Mexico. He enticed investors with the promise of monthly returns that could reach an astonishing 10 percent. However, the SEC’s investigation revealed a shocking truth – none of the funds entrusted by U.S. investors were directed towards any legitimate investment ventures. Instead, Gutierrez was orchestrating a Ponzi scheme and a particularly insidious form of affinity fraud, using the investments to finance his personal expenditures, including the acquisition of a lavish $2.5 million mansion in Texas. The SEC did not stop at Gutierrez alone; it also brought charges against Efren Quiroz, Luis Quiroz, Maria Tolentino, and Diayanira Rendon for their complicity in this fraudulent endeavor.

Melissa R. Hodgman, Associate Director in the SEC’s Division of Enforcement, expressed the gravity of the situation, stating, “Our investigation uncovered this egregious fraud that cost the investors involved more than $6 million. We are committed to holding promoters of these types of affinity frauds accountable.”

The SEC’s complaint asserts various violations, with Gutierrez and Aras accused of violating both antifraud and registration provisions within federal securities laws. Efren and Luis Quiroz face charges for operating as unregistered brokers, while Tolentino, along with the Quiroz brothers, is charged with violating registration provisions and aiding and abetting Gutierrez and Aras in their violations of the antifraud provisions. Furthermore, Rendon is charged with aiding and abetting Gutierrez and Aras in their violations of the antifraud provisions. The SEC is seeking permanent injunctions, civil penalties, and disgorgement of ill-gotten gains with prejudgment interest as remedies in response to these egregious actions.

In an effort to resolve the matter without admitting or denying the allegations, Efren and Luis Quiroz, Tolentino, and Rendon have consented to the entry of judgments against them for all claims. These judgments include full injunctive relief against future violations and are subject to court approval. Additionally, Efren and Luis Quiroz have agreed to Commission orders that prohibit their association with registered entities or participation in penny stock offerings.

In light of this troubling case, the SEC’s Office of Investor Education and Advocacy has issued an Investor Alert. This alert provides valuable tips to investors on how to avoid making investment decisions solely based on shared personal connections with those recommending or selling investments, highlighting the importance of thorough due diligence and skepticism in the investment landscape.