Gary S. Wykle and Alejandro Cortes
SEC Charges Florida Men for Ponzi Scheme Targeting Investors in Puerto Rico
Litigation Release No. 24882 / September 2, 2020
Securities and Exchange Commission v. Gary S. Wykle and Alejandro Cortes, Case No. 1:20-cv-23616-DPG (S.D. Fla. Filed August 31, 2020)
The Securities and Exchange Commission today announced that it filed charges against the former principals of a now defunct Florida-based purported "financial services" company for defrauding investors in their unregistered securities offerings.
The SEC's complaint alleges that The Republic Group, Inc., through its president Gary S. Wykle and executive vice-president and securities salesperson Alejandro Cortes, raised approximately $9.4 million from at least 150 investors in Puerto Rico and Florida through sales of promissory notes. Wykle and Cortes allegedly told prospective investors that the purchase funds for the notes, which generally offered investors interest rates ranging from 2.5% to 3% per month, would be used to make short-term, high interest loans to travel industry businesses in the Dominican Republic. As alleged, however, Republic Group never used investor funds to make these loans. Instead, the complaint alleges that Wykle misappropriated more than $1.2 million in investor funds for his own use, and also used new investor money to pay monthly interest to earlier investors. Wykle allegedly also misused offering proceeds by paying undisclosed sales commissions totaling $1.28 million to Cortes. The complaint further alleges that Cortes illegally acted as an unregistered broker while offering and selling Republic's securities, and that Wykle and Cortes sold the notes without registering their offering of securities.
The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that Wykle and Cortes violated the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and the broker registration provisions of Section 15(a) of the Securities Exchange Act of 1934. The complaint further alleges that Wykle violated the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Without admitting or denying the allegations in the complaint, Wykle and Cortes have consented to the entry of a judgment that imposes permanent injunctions against them, orders Wykle to pay disgorgement of $948,295, prejudgment interest of $136,979, and a civil penalty of $192,768, and orders Cortes to pay disgorgement of $749,280, prejudgment interest of $111,805, and a civil penalty of $75,000. The settlements remain subject to court approval.
On September 2, 2020, the U.S. Attorney's Office for the District of Puerto Rico announced parallel criminal charges against Wykle and Cortes.
The SEC's investigation was conducted by Raynette R. Nicoleau and Mark Dee in the Miami Regional Office, and supervised by Chedly C. Dumornay. The SEC appreciates the assistance of the Florida Office of Financial Regulation.
Last Reviewed or Updated: May 31, 2023