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Archives for: April 2011, 26

Investors Defrauded Through Sale Of Unregistered Securities

By Securities Law on Apr 26, 2011 | In Legal Actions

Three company executives of Massachusetts-based subprime auto loan provider Inofin, Inc. were charged with violating the antifraud and registration provisions of the federal securities laws by the Securities and Exchange Commission (SEC). Michael Cuomo, Kevin Mann and Melissa George allegedly misled investors about their lending activities and diverting millions of dollars in investor funds for personal benefit.

According to the SEC’s complaint filed in federal court in Boston, the executives illegally raised at least $110 million from hundreds of investors in 25 states and the District of Columbia through the sale of unregistered notes. Investors were reportedly told that Inofin would use the money for the sole purpose of funding subprime auto loans and to expect to receive returns of 9 to 15 percent. Money was instead being used for personal gain and by Cuomo and Mann to open four car dealerships and begin multiple real estate property developments, according to the complaint.

Inofin and executives allegedly misrepresented Inofin’s financial performance beginning as early as 2006 until 2011. Despite a negative net worth and a progressively deteriorating financial condition, the SEC found that Inofin and its principal officers continued to offer and sell Inofin’s unregistered securities while “knowingly or recklessly misrepresenting to investors that Inofin was a profitable business and sound investment.”

Inofin reportedly maintained its license to do business as a motor vehicle sales finance company by preparing and submitting materially false financial statements to its licensing authority, the Massachusetts Division of Banks.

Also charged in the complaint are two sales agents, David Affeldt and Thomas K. (Kevin) Keough. The duo allegedly promoted the offering and sale of Inofin’s unregistered securities and failed to register with the SEC as a broker-dealer. The SEC is seeking civil injunctions against all parties involved, as well as the return of ill-gotten gains and financial penalties.