The US Securities and Exchange Commission (SEC) has accused Ramil Palafox, founder of PGI Global, of orchestrating a $198 million crypto fraud scheme. Lavish spending, false promises, and widespread investor losses are at the centre of the scandal that unfolded between 2020 and 2021.

Fraudulent Scheme Behind PGI Global

According to the SEC, PGI Global operated as a front for fraudulent activities. Palafox promised investors significant returns from crypto and foreign exchange trading, even though the trades were non-existent. To sustain the scheme, he offered referral bonuses, enticing new investors into the fold.

The fraud persisted from January 2020 to October 2021, during which Palafox reportedly misused $57 million of investor funds on personal luxuries, including Lamborghinis, high-end retail goods, and extravagant personal expenses.

Lavish Spending and Investor Deception

Rather than delivering promised returns, PGI Global spent the majority of its funds on false payouts to earlier investors and referral bonuses, a classic hallmark of a Ponzi scheme. Reports reveal Palafox’s luxury purchases extended to watches, cars, and homes, all funded by defrauded investors.

Scott Thompson, Associate Director of the SEC’s Philadelphia Regional Office, stated, “Palafox lured investors with the promise of guaranteed profits from sophisticated trading. Instead, he used their money to fund his lavish lifestyle.”

Legal Action and Sanctions

The SEC has filed a complaint in the District Court for the Eastern District of Virginia, accusing Palafox of violating federal securities laws. The charges include fraud and the sale of unregistered securities.

The SEC seeks to impose permanent injunctions barring Palafox from engaging in multilevel marketing, selling securities, or dealing in crypto assets. Additionally, the court is demanding the return of ill-gotten funds, along with prejudgment interest and civil penalties. Relief claims target BBMR Threshold LLC and individuals connected to Palafox, including Darvie Mendoza and Marissa Mendoza Palafox.

Call for Vigilance in Crypto Investments

The scandal highlights ongoing risks in the cryptocurrency market, where unscrupulous actors exploit investor enthusiasm for digital assets. As Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit, stated:

The SEC’s investigation, led by its Philadelphia Regional Office, is ongoing, with assistance from the FBI, IRS, and U.S. Attorney’s Office. The litigation aims to recover funds for victims and prevent Palafox from orchestrating similar schemes in the future.