The Securities and Exchange Commission (SEC) has filed an enforcement action against Zera Financial and Luis A. Romero. The complaint states that. Zera and Romero have raised more than $2.28 million from about 168 investors. The money is said to have been “dissipated.”
The SEC claims that the defendants promised 3% monthly returns, which would mean more than 36% annual returns, on investments of as little as $500. The defendants also represented that investments in Zera were FDIC-insured, which was apparently untrue. The offering was promoted on the internet as well as an Instagram account. Apparently, an App on Google Play and the App Store was also made available.
Zera claimed to be powered by Fintech or a Banking as a Service provider.
This past March, the FDIC sent a cease and desist letter to the company as its claims were deemed to be inaccurate. Zera removed the FDIC claims but continued to promote the offering as secure.
Another tactic that Romero utilized was posing as an investor on Reddit – telling the audience that Zera was secure, touting the returns he had generated.
To quote the complaint:
“I opened a $45k account and just finished my term. I withdrew every month $1,350, but closed out the account to see if I will [sic] get my initial $45k deposit back and I did 2 days later. I’m starting another term with $70k. I had no issues with them.”
“Scared money makes no money” and “Most of the people saying it’s a scam or ponzi [sic] I’m sure don’t even have an account.”
The complaint states that Romero placed some of the money in his personal accounts as well as three crypto accounts where he traded using the funds.
The complaint claims Romero used investor funds to “cover a host of personal expenses including horseshoes, saddles, and feed; purchases at a tropical fish store; furniture and other retail purchases; apartment rent; and personal car payments. He also transferred about $61,000 of investor funds to a church. Romero has also withdrawn more than $710,000 in cash from the Zera accounts.”
The SEC reports that a court has granted an emergency relief against Zera and Romero, including a temporary restraining order and an order freezing assets. A hearing is scheduled for October 11, 2023.