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The Securities and Exchange Commission (SEC) has charged Andres L. Pimstein, The Bottom Line of South Florida, Inc, and Summit Trading LLC with operating a $30 million Ponzi scheme.  According to the complaint, the defendants sold securities to over 80 investors in five states, from at least 2005 to April of 2008.  The defendants told investors that their money would buy personal electronics, such as iPods, from vendors in the U.S. to be exported to South America and sold in large department store chains.  The complaint further alleges that the defendants claimed to have an edge over their competitors because the CEO of the South American partner company, Ripley Corp, was Pimstein’s cousin. 

The complaint alleges that, contrary to defendants’ representations, they purchased very few electronics with investor funds and did not re-sell any electronics to Ripley. Instead, defendants operated a large Ponzi scheme by using newly invested funds to make principal and interest payments to existing investors. The defendants 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 complaint, the operation folded when the interest and principal owed in April 2008 was more than the new investments, raised by the defendants, could substantiate.  The complaint also says that Pimstein confessed to local Florida police that he was operating a Ponzi scheme and admitted that the defendants had never sold anything to Ripley Corp.   The defendants have consented to a judgment permanently enjoining them from violating federal securities laws, and ordering them to pay disgorgement, along with other fines, which will be determined by the court in the future.   

 Are you a baby boomer or a senior citizen?  If so, you will be targeted by a financial criminal or a reckless broker.  With your retirement at stake, does it make sense to base your deicisons on a sales pitch, a smile, and a handshake?  Learn what a former SEC Enforcement Branch Chief can find out about your broker or the investment you are considering.  Like it has for many others, that extra step might save your retirement.