The Securities and Exchange Commission has charged an Orlando, Fla., man with misappropriating $7.1 million of a Puerto Rican municipality’s funds. The regulator claims that Eugenio Garcia Jimenez Jr., an unregistered investment advisor, defrauded the Municipality of Mayagüez, Puerto Rico.
In 2016, he was managing $9 million of the municipality’s funds, which he promised to invest in no-risk investments with annual returns of 10%. The city planned to use the money to fund a new trauma center, among other projects.
Instead Garcia bought U.S. Treasuries and took out a margin loan using the notes as collateral. Next, over a six-month period, he transferred $7.1 million of the funds to himself, entities he controlled or colleagues, according to the SEC.
“The municipality chose Garcia as an investment adviser and entrusted him with millions of dollars of taxpayer funds,” said Eric I. Bustillo, director of the SEC’s Miami regional office. “As alleged, Garcia took advantage of that trust and misappropriated millions of dollars of taxpayer funds, causing the municipality great harm.”
The agency seeks a permanent injunction, disgorgement of allegedly ill-gotten gains plus interest and a civil penalty.