SEC: Barred broker solicited $2.7M from investors in unregistered securities offering
The SEC is accusing a former broker barred from the industry in 2012 of taking $2.7 million from elderly and retired clients in an unregistered securities offering.
Rafael Antonio Calleja Jr. of Naples, Florida, spent $123,000 of the investors’ funds for his golf outings, shopping and cruises, according to a complaint filed this month by the SEC in Florida federal court.
In a proposed final judgment filed by the SEC with the court, Calleja consents to the terms requested by the SEC — to stop violating federal securities law and to be liable for the $123,000 plus interest –without admitting or denying the allegations. But based on his financial statement showing that he is unable to pay, the proposed judgement doesn’t order him to make any payments or fines. Calleja could not be reached and his attorney Leonard Bloom was not immediately available for comment.
Calleja and a company he part-owned, Tower Trade Group, solicited and received the investments in 2014, with Calleja personally touting the merits of the investment to his 10 investors and guaranteeing that their principal was insured and that they would receive a fixed-rate return after one year, according to the SEC.
What he didn’t tell investors was that he had consented in 2012 to be permanently barred from the securities industry by FINRA, the SEC says. Until the previous year, Calleja was employed as a broker at Morgan Stanley and was barred based on allegations that arose from a previous employment stint at Merrill Lynch years earlier.
Calleja, in the unregistered securities offering, didn’t invest the funds as he told his investors he would, and didn’t disclose that their money would be sent offshore to be invested by a non-U.S. company, according to the SEC complaint, which doesn’t identify the offshore company. The investment offering was not eligible for any registration exemption because all but two of the investors were non-accredited and not sophisticated, according to the SEC.
At least $90,000 of the funds weren’t invested at all, and the non-U.S. company started investing the funds about eight months after the first investor’s deposit, according to the SEC, with most of the funds not invested in until nearly a year after the first deposit. The non-U.S. company re-paid all of the investors in full “after discovering Calleja’s misuse of investor funds,” covering the shortfall from what Calleja had spent, the SEC complaint states.
The SEC’s complaint accuses Calleja of failing to provide information to investors as required by federal securities law, failing to file a registration statement for the investment scheme and engaging in securities transactions without a broker-dealer registration.
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Calleja’s last work as a registered broker was at a Morgan Stanley branch in Tampa, Florida, where he was registered from 2009 to 2011. FINRA barred Calleja from the industry in 2012 based on allegations about his work from 2004 to 2007, when he was employed by Merrill Lynch, also in Tampa.
He was, according to FINRA BrokerCheck records, accused of lying to a customer about what accounts he had opened, traded on and transferred funds into for that customer; making securities transactions without the customer’s knowledge; recommending hundreds of securities transactions that didn’t fit the customer’s risk tolerance; transferring funds from a loan management account without the customer’s consent; lying to the customer about his compensation from fees paid by the customer; using an ATM card on the customer’s account to withdraw $67,300 for his personal use; and repaying the customer while hiding the activity from his employer.
Calleja didn’t admit or deny the allegations, but agreed to FINRA’s findings against him and to be permanently barred from associating with any FINRA member, according to BrokerCheck.