SEC Charges PGI Global Founder With Foreign Exchange Trading, $198M Crypto Fraud

The U.S. Securities and Exchange Commission charged 59-year-old Ramil Palafox for orchestrating a fraudulent scheme that raised approximately $198 million from investors worldwide and for misappropriating more than $57 million of investor funds through his now-defunct company.

According to the SEC’s complaint, Palafox’s company – known as PGI Global, i.e., Praetorian Group International Corporation – claimed to be a crypto asset and foreign exchange trading company. From January 2020 through October 2021, Palafox – who resided in Las Vegas and Porter Ranch, Calif. – offered and sold PGI Global “membership” packages, which he claimed guaranteed investors high returns from PGI Global’s supposed crypto asset and foreign exchange trading and offered members multilevel-marketing-like referral incentives to encourage them to recruit new investors.

Palafox and promoters working at his direction made material misrepresentations to investors throughout the relevant period, according to the complaint, regarding PGI Global’s operations, Palafox’s background, and the status of investors’ funds. This included representing to investors that Palafox had expertise in the crypto asset industry; that PGI Global had a team of traders generating revenue for the company, including a purported trading team based in the Philippines; that the company had developed an “auto trading” platform to trade crypto assets using artificial intelligence; and that PGI Global was licensed to trade crypto assets in the Philippines and Estonia.

However, as the complaint alleges, Palafox misappropriated more than $57 million in investor funds to buy Lamborghinis; items from luxury retailers such as Cartier, Versace, and Louis Vuitton; and for other personal expenses. He also used the majority of the remaining investor funds to pay other investors their purported returns and referral rewards in a Ponzi-like scheme until its collapse in late 2021.

“As alleged in our complaint, Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches, and homes using millions of dollars of investor funds,” said Scott Thompson, associate director of the SEC’s regional office in Philadelphia. “We will continue to investigate and take action against bad actors who take advantage of investors with promises of guaranteed passive income and other lies and deceit.”

PGI Global never filed a registration statement in connection with its offerings of securities in the form of PGI Global membership packages. RV Palafox and others nevertheless offered and sold these PGI Global securities via general solicitations to investors worldwide.

“Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed,” said Laura D’Allaird, chief of the SEC’s new Cyber and Emerging Technologies Unit. “In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud.”

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Virginia, charges Palafox with violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctive relief, conduct-based injunctions preventing Palafox from participating in multilevel-marketing programs involving the offer or sale of securities and offerings of crypto assets bought or sold as a security, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.

The complaint also names BBMR Threshold LLC, Darvie Mendoza, Marissa Mendoza Palafox, and Linda Ventura as relief defendants and seeks disgorgement of their ill-gotten gains and prejudgment interest. During the relevant period, Palafox also transferred funds, assets, vehicles, and other items purchased with PGI Global investor funds to the relief defendants.

In a parallel action, Palafox was arraigned in U.S. District Court on criminal charges brought by the U.S. Attorney’s Office for the Eastern District of Virginia.

Earlier this month, the SEC provided clarity on disclosure rules for crypto asset securities offerings.

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