- The U.S. Securities and Exchange Commission (SEC) has charged Ramil Palafox, the founder of PGI Global, with orchestrating a $198 million crypto fraud
- Investigations have revealed that over $57 million was misappropriated for personal luxury expenses
- The scheme operated as a Ponzi-like structure, collapsing in late 2021
The U.S. Securities and Exchange Commission (SEC) has filed charges against Ramil Palafox, founder of PGI Global, for allegedly running a fraudulent investment scheme that raised approximately $198 million from investors worldwide. The SEC’s complaint details that Palafox misused over $57 million of investor funds for personal luxury purchases, including cars and high-end retail items. The operation, an alleged forex and crypto trading company, functioned as a Ponzi-like scheme, using new investor funds to pay returns to earlier investors, until its collapse in late 2021.
$57 Million Misappropriated
According to the SEC’s complaint, PGI Global, under Palafox’s leadership, presented itself as a crypto asset and foreign exchange trading company. From January 2020 through October 2021, the company offered “membership” packages promising high returns from trading activities. Investors were also incentivized through multi-level marketing-like referral programs to recruit new participants. However, the SEC alleges that Palafox diverted more than $57 million of these funds for personal expenses, including purchasing luxury cars and items from high-end retailers.
The SEC’s investigation uncovered that the majority of the remaining investor funds were used to pay purported returns and referral rewards to other investors, characteristic of a Ponzi-like scheme. This unsustainable model eventually led to the scheme’s collapse in late 2021.
Guaranteed Profits Were Anything But
The SEC has charged Palafox with violations of the federal securities laws’ antifraud provisions. The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. Scott Thompson, Associate Director of the SEC’s Philadelphia Regional Office, stated, “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.”
The case is another reminder that anyone promising you guaranteed returns is almost certainly doing it nefariously or not at all.
