The Securities and Exchange Commission today charged an investment adviser in Branchburg, N.J. with operating a long-running fraud targeting retirees.
The regulator alleges that Sandra Venetis sold $11 million in fake promissory notes to retirees and other vulnerable investors over a period of 13 years.
Ms. Venetis allegedly told clients at her three firms (Systematic Financial Associates Inc., an investment adviser; Systematic Financial Services LLC, an accounting and tax preparation firm; and Systematic Financial Services Inc.) that the notes were guaranteed by the Federal Deposit Insurance Corporation, and would earn up to 11% annually, tax-free.
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, the commission claims.
In reality, Ms. Venetis used her clients' money to pay her own debts, the SEC said. According to the commission, the adviser racked up a substantial bill through international travel, gambling, and mortgage payments. She also allegedly gave money to some of her relatives, who will now be forced to repay it.
(See how the charges against Ms. Venetis compared to similar charges recently brought against other individuals in the new InvestmentNews Fraud Charge Tracker database.)
Ms. Venetis, the SEC said today, has agreed to settle the charges. The adviser agreed to have her assets frozen and will pay penalties, to be determined at a later date.
Ms. Venetis also agreed to be barred from any future association with any investment adviser or broker-dealer.
"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. "The SEC's enforcement action and the settlement reached ensure that she will never work in the securities industry again."
A search of FINRA's BrokerCheck today showed no record of Ms. Venetis, or the “Systematic” firm name.
Systematic Financial Associates Inc.'s most recent ADV showed discretionary assets of $ 51.7 million, and 774 accounts, according to the SEC Web site.
