Owners of a payday loan company targeted members of South Florida’s Venezuelan community in a fraudulent investment scheme that raised more than $66 million, according to the U.S. Securities and Exchange Commission.
The SEC complaint, filed Monday in U.S. District Court in Miami, said Sky Group USA and owner Efrain Betancourt, 32, sold promissory notes to at least 505 investors who were promised returns of between 24% and 120%.
Investors were told their money would be used by Sky Group to make small-dollar short-term loans to consumers with poor credit or no credit and for costs associated with the loans, the complaint states.
While the investors were told that the company’s payday loan business was profitable, in reality “the proceeds Sky Group generated from its consumer loan business were woefully insufficient to cover principal and interest payments to investors,” the complaint states.
Instead, Betancourt used money from new investors to pay promised dividends to early investors, a familiar characteristic of a Ponzi scheme, the SEC said.
The complaint alleges that he also spent at least $2.9 million in luxuries for himself, including on a chateau wedding in France and vacations to Disney World and the Caribbean. At least $3.6 million was given to friends and relatives “for no apparent business purpose.”
“Sky Group and Betancourt lured unsuspecting investors, including many members of the South Florida Venezuelan-American community, with false claims and promises of high-return, low-risk investments,” said Eric I. Bustillo, director of the SEC’s Miami regional office, in an SEC news release. “We continue to caution investors to be wary of any investment that promises returns that are too good to be true.”
Michael Bresnick, a Washington D.C.-based attorney representing Sky Group and Betancourt, said in an email statement, “We deny the allegations and look forward to challenging them in court.”
Betancourt’s ex-wife, Angelica Betancourt, 33, is named as a relief defendant in the complaint. Typically, the SEC names as individuals as relief defendants if they are believed to have obtained ill-gotten gains but are not accused of wrongdoing.
The complaint states that Angelica Betancourt received at least $1.2 million of Sky Group investor funds “for no apparent legitimate business purpose.”
Reached after this story was posted, Angelica Betancourt said she doesn’t have an attorney because “I don’t have any money.”
Also named as a relief defendant is EEB Capital LLC, a Miami company controlled by the Betancourts that deposited $1.5 million in two bank accounts “for no apparent business purpose.”
Although Sky Group USA was headquartered in Miami, its chief business unit, Sky Cash USA, was located in a strip mall at 2637 East Atlantic Boulevard in Pompano Beach, just west of the Intracoastal Waterway.
Sky Group USA filed for Chapter 7 bankruptcy in 2020, and the phone number listed on Sky Cash’s still-live website is out of service. According to the website, Sky Cash offered loans “from as little as $100 and up to $500? for finance charges not disclosed until the loan agreement is provided to the borrower.
Miami-Dade circuit court files show that Sky Group has been sued by investors nine times since March 2020.
Betancourt relied on word-of-mouth within South Florida’s Venezuelan-American community to find investors. South Florida — Doral and Weston in particular — is home to the largest concentration of Venezuelans in the United States.
Betancourt also used a network of 52 unlicensed sales agents who made 1% of each investment. Commissions paid to the agents totalled $9.8 million, the suit states.
One of the circuit court suits, filed by three individuals, stated that Betancourt conducted seminars in various locations in the U.S. and in Venezuela to solicit loans with promises to make monthly interest payments and repay the loans at the end of one year.
Sky Group would make monthly interest payments while soliciting lenders’ family and friends to make additional loans. “Sky’s method of operation demonstrates that it only intended to pay interest for as long as necessary to dupe additional persons to give Sky loans,” the complaint said, adding that none of the three plaintiffs received all of the promised interest nor repayment of the loans.
The suit said Betancourt took advantage of the Venezuelans’ lack of knowledge of U.S. securities laws and investor protections.
Another suit, by a husband and wife, lists 19 loans totaling $576,000 made to Sky Group over 18 months that were supposed to have returned 48% in annual interest.
The scheme was not limited to South Florida or to Venezuelan-Americans. Investors came from at least 18 U.S. states and territories and 19 additional countries, the SEC’s complaint states.
Sky Group’s troubled payday loan business ran into trouble with state regulators in Washington and Oregon, who in 2019 levied fines against the company for unlicensed lending.
Sky Group and Betancourt are charged with numerous counts of securities fraud, while Betancourt is charged with acting as an unlicensed broker. The complaint seeks permanent injunctions barring further sales and disgorgment of alleged ill-gotten gains, civil penalties and interest.
Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, by email at rhurtibise@sunsentinel.com or on Twitter @ronhurtibise.
