U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23371 / September 30, 2015
Securities and Exchange Commission v. Charles Riel III and REinvest LLC, Civil Action No. 5:15-CV-01166 (N.D.N.Y)
SEC Charges Upstate New York Man with Securities Fraud
On September 29, 2015, the Securities and Exchange Commission charged a Clay, N.Y.-based individual and a company he controls with defrauding investors by promising them outlandish “low risk” investment returns and then misusing the investors’ money to, among other things, pay for personal living expenses and engage in risky, undisclosed futures trading.
The SEC’s action, filed in U.S. District Court for the Northern District of New York, alleges that Charles Riel III and REinvest LLC raised over $280,000 from at least five investors by purporting to sell them securities in REinvest. The complaint alleges that although Riel told investors that REinvest was going to invest their money in high yield financial growth vehicles that would generate returns as high as 150% over five years, Riel simply stole most of the money by using it to make payments on a mortgage, taxes, and utility and cable bills, and to make cash and debit card withdrawals and charitable donations. The complaint also alleges that Riel used investors’ money to make Ponzi-like payments to an earlier investor, and he transferred some investor funds to his sister. Riel also allegedly lost some of the investors’ money by trading in crude oil and other futures. Finally, the complaint alleges that Riel did not use any of the investors’ funds to make the investments that he had represented to investors he would make, and to conceal his fraud, Riel sent at least two investors phony account statements falsely showing that their investments had earned a 30% annual rate of return.
The SEC’s complaint alleges that Riel and REinvest violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 and that Riel aided and abetted REinvest’s violations of these provisions and is liable as a control person for REinvest’s violations of Section 10(b) and Rule 10b-5. The Commission seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil monetary penalties, and a verified accounting against the defendants.
The SEC’s investigation was conducted by Christopher M. Castano, Kathy Murdocco and George N. Stepaniuk in the New York Regional Office and the litigation is being handled by Preethi Krishnamurthy and Mr. Castano. The case is being supervised by Sanjay Wadhwa. The SEC thanks the United States Attorney’s Office for the Northern District of New York and the Federal Bureau of Investigation for their assistance in this matter.