The Securities and Exchange Commission has charged a second Miami-based financial advisor in a $4.6 million multiyear cherry-picking scheme.
Lina Maria Garcia, president and chief compliance officer of UCB Financial Advisers, was the latest charged in the case, in which more than $4 million was allegedly channeled to accounts held in the name of the parents of her partner, Ramiro Jose Sugranes, co-owner of UCB.
The SEC in June announced related charges against Sugranes, UCB Financial Advisers and its affiliate UCB Financial Services.
The amended complaint, filed Monday in the U.S. District Court for the Southern District of Florida, alleged that Garcia worked with Sugranes and others to divert thousands of profitable trades worth $4.6 million in stocks and options on securities to two “preferred accounts” held in Sugranes's parents name, and to saddle other clients with losing trades.
Sugranes’ parents, Ramiro Sugranes Hernandez, 83, and Thelma Lanzas De Sugranes, 79, of Leon, Nicaragua, are named relief defendants in the amended complaint.
The SEC said Sugranes, 57, and Garcia, 49, who are romantically linked, engaged in the long-running cherry-picking scheme through UCB Services and UCB Advisers, an investment advisory firm of which they are partial owners, by allegedly using an average price trading account used by the UCB entities to purchase stocks and options on behalf of numerous client accounts. Sugranes and Garcia then allocated those trades to specific accounts.
The SEC said if the price of the securities increased during the trading day, Sugranes and Garcia usually closed out the position and allocated those profitable trades to the two accounts held by Sugranes' parents. But if the price of the securities decreased during the trading day, they would allocate the unprofitable trades to other client accounts, or non-preferred accounts, the SEC alleged.
The complaint said UCB placed trades for about 100 clients, both entities and individuals, with addresses in Florida, Minnesota, New York, and Texas, and other countries, including Chile, Columbia, and Nicaragua.
The fraudulent scheme resulted in ill-gotten gains of at least $4.6 million, not including losses avoided, that was deposited into the preferred accounts, and negatively impacted at least 75 non-preferred accounts, the complaint said. It also said 16 of the non-preferred accounts sustained more than $25,000 in first-day losses, and two other non-preferred accounts sustained more than $1 million in first-day losses.
“The odds that random chance could account for this difference in first-day profits and losses between the preferred and non-preferred accounts is less than one in a billion,” the complaint noted.