SEC Obtains Asset Freeze Against Offshore Fund and Its Operators

FOR IMMEDIATE RELEASE

2021-107

Washington D.C., June 21, 2021 —

The Securities and Exchange Commission today announced that it has filed an emergency action charging an offshore fund and two individuals with engaging in a fraudulent scheme, and obtained an asset freeze to safeguard remaining investor funds at risk of immediate dissipation.

The SEC’s complaint alleges that from at least 2018 to the present, Ofer Abarbanel of California and Victor Chilelli of Delaware and New York have engaged in a scheme to defraud investors in an offshore mutual fund they controlled, the Income Collecting 1-3 Months T-Bills Mutual Fund. According to the complaint, Abarbanel represented to investors that the fund would invest primarily in U.S. Treasury securities and also enter into certain types of reverse repurchase agreements with U.S. Treasury securities serving as collateral. As alleged, however, the fund invested only minimally in U.S. Treasuries, and did not enter into any reverse repurchase agreements along the lines described in offering documents. Instead, the complaint alleges, the fund routed nearly all investor funds to shell companies under the defendants’ control as part of uncollateralized sham lending arrangements with the fund. According to the complaint, when investors sought to redeem $106 million in investments last month, the defendants refused and instead took steps to transfer funds to an account from which no redemptions could be drawn.

“As this emergency action shows, the SEC will move quickly to protect investor funds from potential dissipation and misappropriation,” said Carolyn M. Welshhans, Associate Director in the SEC’s Division of Enforcement. “We can detect misconduct and enforce the securities laws even where, as we allege happened here, fraudsters transfer and divert funds to shell companies.”

The SEC’s complaint, which was filed in federal court in the Southern District of New York today, charges Abarbanel, Chilelli, and the fund with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and permanent bars against participating in future securities offerings. The complaint also names as relief defendants six companies that either acted as purported counterparties with the fund or received fund assets in furtherance of the scheme: Institutional Syndication LLC, North American Liquidity Resources LLC, Institutional Secured Credit LLC, Growth Income Holdings LLC, CLO Market Neutral LLC, and Global EMEA Holdings LLC.

The SEC’s investigation was conducted by Virginia M. Rosado Desilets, Gregory C. Padgett, Alexandra M. Arango, Andrew M. Shirley, and David F. Miller, and supervised by Ms. Welshhans, Adam S. Aderton, Co-Chief of the Asset Management Unit, and David A. Becker. The litigation will be led by Paul W. Kisslinger and Sarah Heaton Concannon under the supervision of Jan M. Folena.

https://www.sec.gov/news/press-release/2021-107

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SEC Issues Whistleblower Awards Totaling Nearly $5.3 Million

FOR IMMEDIATE RELEASE

2021-106

Washington D.C., June 21, 2021 —

The Securities and Exchange Commission today announced awards of nearly $5.3 million to whistleblowers who provided information and assistance in separate enforcement proceedings.

In the first order, the SEC awarded a whistleblower nearly $4 million for providing information that caused the SEC to open an investigation that led to a successful enforcement action. The whistleblower provided extraordinary assistance, participating in hours of telephonic interviews and communicating dozens of times with investigative staff. The whistleblower also identified key witnesses and provided documents to the staff.

In the second order, the SEC awarded approximately $1.3 million to three individuals who provided information that prompted the opening of an investigation. The first claimant, who received the largest award, provided substantial, ongoing assistance that conserved SEC time and resources and played an important role in the success of the enforcement action.

“These whistleblowers provided critical information that alerted Commission staff of the violations,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Their information and continuing assistance played a key role in the successful resolution of the actions.”

The SEC has awarded approximately $937 million to 178 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower

https://www.sec.gov/news/press-release/2021-106

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