Rep. George Santos, R-N.Y., who is under scrutiny for lying about his education and employment background, got at least one investor for a company the Securities and Exchange Commission has accused of being a Ponzi scheme, The Wall Street Journal reported.
The Journal relied on sources and reviewed documents indicating Santos was hired by the firm Harbor City Capital in Melbourne, Florida, in 2020 and got a “significant” amount of money from a wealthy investor for the company.
Sources told the Journal that when the investment failed to deliver the returns promised to the investor, Santos said he had raised $100 million for the company himself and had money from his own family invested as well.
The SEC filed a complaint against the company in April 2021, calling it a “fraudulent Ponzi scheme victimizing hundreds of investors across the United States.”
According to the complaint, Harbor City Capital and its founder and CEO Jonathan P. Maroney “raised more than $17.1 million through a series of unregistered fraudulent securities offerings in several entities formed and controlled by” the company and Maroney.
“The securities sold were in the form of either promissory notes, funding agreements, or ‘high yield, secured bonds,'” according to the complaint.
Maroney funneled about $4.48 million of investors’ money for his personal use, the complaint states.
Another $6.5 million was used to pay “returns” to other earlier investors to keep the Ponzi scheme going, according to the complaint, as well as $1.4 million in payments to other entities unrelated to the purpose of the offerings.
Through his attorney, Joseph Murray, Santos said he was not aware of the company’s alleged criminal activity.
“As to any questions about Harbor City Capital, in light of the ongoing investigation and for the benefit of the victims, it would be inappropriate to respond other than to say that Congressman Santos was completely unaware of any illegal activity going on at Harbor City Capital,” Murray told CNN.
While not named in the SEC lawsuit, Santos boasted about his role “managing” the company’s investment accounts when he was working there in 2021.
“Currently at Harbor City Capital, I manage a $1.5 billion fund, right?” CNN reported Santos saying in a 2020 interview. “And I know how to manage it well. I give record returns to anybody who watches this; they’ll understand. I’m giving a 12% fixed yield income return a year, which nobody in the market’s giving 4[%] and we’re giving 12[%]. We’re also giving up to 20[%] to 26% in IRR [internal rate of return] return on our investors’ capital. So if there’s something I know how to do, it’s manage dollars and grow them.”
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