A home for herself and her daughter; renovations on her brother’s home; paying off gambling debts; vacations to Alaska, Italy, France, India, and the Caribbean–totaling about $11 million. This is what Sandra Venetis did with her investors’ money, instead of investing it, according to the SEC.
The allegation claims that by using three firms she established, Venetis operated a multi-million dollar fraud involving the sale of phony promissory notes to investors, many of whom are retired.
The SEC claims that Venetis told some investors that the promissory notes were guaranteed by the Federal Deposit Insurance Corporation and would earn interest of approximately 6% to 11% per year that would be tax-free due to a loophole in the tax code. She also told investors that she would use their money to fund loans to doctors that would be backed by Medicare reimbursement payments to those doctors.
“Venetis abused her position of trust to target older investors who were the most vulnerable to her egregious lies and misrepresentations,” said Bruce Karpati, Co-Chief of the SEC’s Asset Management Unit.
According to the SEC’s complaint filed in federal court in New Jersey, Venetis and the three entities that she founded, owned, or controlled have obtained at least $11 million from investors since approximately 1997. Systematic Financial Associates Inc. is an investment adviser, Systematic Financial Services LLC is an accounting and tax preparation firm, and Systematic Financial Services Inc. is an entity Venetis created to conduct the fraudulent offerings. Venetis, acting on behalf of the three entities, solicited and obtained funds from clients and others to invest in promissory notes, fixed income investments, or other side investments.
The SEC alleges that the representations made by Venetis to investors were entirely false and the promissory notes and other offerings were unsupported by any investments, assets, or related revenues. Venetis simply fabricated the names and signatures of “doctors” or forged signatures of other people she claimed were recipients of the loans.
Venetis and the entities have agreed to settle the SEC’s charges and have consented to all of the relief that the SEC seeks in its complaint, including the entry of a court order enjoining them from future violations of the above provisions of the securities laws, ordering the payment of disgorgement of ill-gotten gains with prejudgment interest, financial penalties, an asset freeze, accountings, and the appointment of an independent monitor. The settlement will defer the determination of the amount of the monetary relief to a later date. The settlement is not final until approved by the court.