A San Antonio-area businessman and his company defrauded investors, many of them retired San Antonio police officers or first responders, out of more than $14 million through a fraudulent investment scheme involving the offer and sale of purportedly secured promissory notes, according to a complaint filed by the Securities and Exchange Commission.

The complaint, filed on Thursday in U.S. District Court for the Western District of Texas, San Antonio Division, alleges that from 2013 through January 2019, Victor Lee Farias and his company, Integrity Aviation & Leasing (IAL), raised $14 million from investors, promising they would use the funds to purchase engines and other aircraft parts for leasing to major airlines. The revenues derived from this business would be used to pay investors interest on their investments at annual rate of 10% to 12%. As part of his effort, Farias used SEC letterhead to help perpetuate his scheme.

Farias, as noted in the complaint, was formerly associated with a registered broker-dealer and investment advisor and held several securities licenses, all of which have expired. According to BrokerCheck, he associated with seven entities since 1998. In 2011 through 2013, he was simultaneously registered with Capital Guardian LLC in San Antonio and Boerne, Texas, and Further Lane Securities L.P. in Boerne. Both entities were expelled by the Financial Industry Regulatory Authority in 2018.

The SEC complaint said despite representing that the promissory notes would be secured by IAL’s assets, steps were not taken file the necessary documents to secure the investors’ interests. Moreover, Farias and IAL failed to inform investors that Farias had already pledged IAL’s assets as collateral in a separate deal to benefit a separate company that Farias owned, the complaint said.

Farias, the SEC complaint said, misspent a significant portion of the investors’ funds, and used only a small portion for their intended purpose. It alleged that Farias and IAL diverted more than $11.6 million for unauthorized purposes, such as making $6.5 million in Ponzi-like payments to investors and investing $2.7 million to fund a friend’s business. Farias also allegedly misappropriated $2.4 million for personal use, including travel, disbursements for meals, entertainment, apartment rent, jewelry and other luxury retail purchase, and golf and country club expenses.

The complaint said Farias continued to defraud investors even after becoming aware of its investigation. The complaint said Farias deceived at least one investor with the lie that he was taking IAL public in an initial public offering, so he could repay all investors, and that he was working with the SEC on the offering. He used the letterhead from the SEC’s investigative subpoena as proof, the complaint said.

The SEC charged Farias and IAL with violating antifraud and securities registration provisions of the federal securities laws. The complaint seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.