SEC Sues Miami Resident for Conducting Multi-Million Dollar Ponzi Scheme

Washington, D.C., Oct. 30, 2008 (LAWFUEL) – The Securities and Exchange Commission today charged Miami resident Andres L. Pimstein and two private companies, The Bottom Line of South Florida, Inc. and Summit Trading LLC, with securities fraud for conducting a $30 million Ponzi scheme.

The SEC’s complaint alleges that from at least 2005 to April 2008, Pimstein and his agents offered and sold more than $30 million in securities to at least 80 investors in at least five states, purportedly to fund an export business that Pimstein operated through Bottom Line and Summit. The Ponzi scheme collapsed when the interest and principal Bottom Line and Summit were obligated to pay investors substantially exceeded the amount of new funds Pimstein and his agents were able to raise from investors.

“The alleged conduct in this case shows a pattern of outright lies to investors. We remain committed to taking vigorous enforcement action against those who violate the securities laws through fraudulent securities offerings,” said David Nelson, Director of the SEC’s Miami Regional Office.

According to the SEC’s complaint, filed in federal district court for the Southern District of Florida, Pimstein and his agents told investors that Bottom Line and Summit would use the proceeds from their investments to buy iPods and other personal electronics from vendors in the United States for resale to Ripley Corp., S.A., a Chilean company that operates one of the largest department store chains in South America. The complaint further alleges that Pimstein and his agents claimed Bottom Line and Summit had a competitive edge over other electronics suppliers because Pimstein was the cousin of Ripley’s chief executive officer and had previously worked for Ripley.

The SEC’s complaint alleges that, contrary to these representations, very few electronics were purchased with investor funds and no electronics were re-sold to Ripley. Instead, Pimstein, The Bottom Line, and Summit operated a large Ponzi scheme by using newly invested funds to make principal and interest payments to existing investors. Pimstein and the companies also paid commissions to the agents who solicited investors on the defendants’ behalf. In addition, Pimstein used investor funds to pay his personal expenses.

According to the SEC’s complaint, after the scheme collapsed, Pimstein confessed to local police that that he had operated a Ponzi scheme and admitted that Ripley never purchased any electronics from The Bottom Line or Summit.

The SEC’s complaint charges Pimstein, The Bottom Line, and Summit with violating the antifraud provisions of the federal securities laws. In its complaint, the SEC seeks permanent injunctions, disgorgement plus prejudgment interest, and financial penalties against Pimstein, The Bottom Line, and Summit, who have all agreed to settle the permanent injunctive portion of the SEC’s enforcement action without admitting or denying the SEC’s allegations. In the partial settlements, Pimstein, The Bottom Line, and Summit will pay disgorgement plus prejudgment interest and financial penalties, the amounts of which will be determined by the court at a later date.

The U.S. Attorney’s Office for the Southern District of Florida conducted a parallel investigation of this matter, and simultaneously announced the filing of criminal charges against Pimstein alleging mail and wire fraud. The SEC also acknowledges the assistance of the Miami Beach Office of the Federal Bureau of Investigation and the Superintendencia de Valores y Seguros of Chile (SVS) with its investigation.

The investigation is continuing.

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