EB-5 Operator Caught in Securities Fraud Scam

images4TALPFX0

Beginning in the spring of 2010 and continuing through 2013, Serofim Muroff and his companies, Blackhawk Manager, LLC and ISR Capital, LLC, sold securities in Blackhawk Gold, LLC and Quartzburg Gold, LLC, to over 280 foreign investors through the EB-5 Program. This program allows foreign investors to petition for U.S. residency after making a qualified investment in a specified job-creating enterprise.

Although Muroff invested part of the accumulated EB-5 investor funds into acquiring and developing luxury real estate in Idaho and gold mining ventures in Idaho and Montana, he also misappropriated and misused a portion of the funds. Per the SEC complaint, of the roughly $140.5 million raised from foreign investors, Muroff allegedly used over $5 million for personal purposes, including investing in a zip line operation and purchasing two personal residences, a Range Rover, and a BMW. He also diverted $20 million to invest in an options trading strategy, which resulted in a loss of more than $1 million that was never disclosed to investors. Lastly, Muroff used an additional $5.6 million to pay commissions to a company in Taiwan for soliciting Chinese investors.

In addition to paying $5,062,082 in disgorgement and $865,270 in interest, Muroff and his companies agreed to pay a penalty of $2 million. Along with the settlement, which is subject to court approval, Muroff also agreed to be prohibited from conducting EB-5 offerings, acting as an officer or director of a public company, and associating with any investment adviser. Debra Riddle, Muroff’s bookkeeper and administrative assistant, was also charged in the SEC’s complaint. She agreed to pay $503,417 in disgorgement and $81,626 in interest, as well as a $100,000 penalty.

Cases like this serve as a reminder to investors, both foreign and domestic, to perform thorough due diligence when researching investment opportunities. For more information on how Jacko Law Group, PC can help you take steps to perform thorough due diligence, contact us at (619) 298-2880, or email info@jackolg.com.  Thank you.

Advertisements

Leave a comment

Filed under Investment Advisers

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s