Securities and Exchange Commission v. Lev Parnas and David Correia, Civil Action No. 1:21-cv-995 (S.D.N.Y. filed February 4, 2021).

The Securities and Exchange Commission today charged Lev Parnas of Boca Raton, Florida and David Correia of West Palm Beach, Florida for raising millions of dollars from investors by making false and misleading representations and misappropriating the bulk of those funds to pay for personal expenses.

As alleged in the SEC's complaint, from January 2013 through mid-2019, Parnas and Correia raised over $2 million from investors through investments in their entity, Fraud Guarantee. According to the complaint, Parnas and Correia told potential investors that their funds would be used to develop products that would help customers recoup losses resulting from investment or consumer fraud. The complaint further alleges that despite Parnas's and Correia's representations, the funds were instead largely used for personal expenses including travel, jewelry, cars, and disbursements at a casino.  As alleged, Parnas and Correia also falsely told potential investors that they had raised millions of dollars from other investors and that they had invested hundreds of thousands of dollars of their own money into Fraud Guarantee.

The SEC's complaint, filed in federal district court in Manhattan, charges Parnas and Correia with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also charges Parnas and Correia with acting as unregistered brokers in violation of Section 15(a) of the Exchange Act. Correia has agreed to settle the Commission's charges by consenting to a bifurcated judgment enjoining him from violating the charged provisions, with disgorgement and penalties to be resolved at a future date upon motion by the Commission. The settlement is subject to court approval.

In September 2020, the U.S. Attorney's Office for the Southern District of New York announced criminal charges against Correia and Parnas related in part to the conduct described above. Correia pleaded guilty in that matter on October 29, 2020.

The SEC's investigation has been conducted by Lindsay Moilanen, Jordan Baker, John O. Enright and Sheldon L. Pollock of the New York Regional Office, and the litigation will be handled by Lee Greenwood and Ms. Moilanen.  The case is being supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of New York.