George Santos said accused 'Ponzi scheme' he worked at was '100% legitimate' when accused of fraud in 2020 - CNN

CNN  — 

Republican Rep. George Santos, said a institution aboriginal accused of moving a “Ponzi scheme” was “100% legitimate” erstwhile it was accused by a imaginable lawsuit of fraud successful 2020, much than a twelvemonth earlier it was sued by the US Securities and Exchange Commission. Once the company, wherever helium worked, came nether national scrutiny, Santos claimed publically that helium was unaware of accusations of fraud astatine the firm, a CNN KFile reappraisal of Santos’ societal media and statements found.

Santos, the embattled freshman Republican, faces increasing pressure to resign aft helium lied and misrepresented his educational, enactment and household history, including falsely claiming he was Jewish and the descendant of Holocaust survivors. Santos admitted to “embellishing” his resume, but has maintained helium is “not a criminal.”

Santos worked astatine Harbor City Capital Corp. successful 2020 and 2021, a institution the SEC said was a “classic Ponzi scheme” successful an April 2021 ailment against the firm. A Ponzi strategy is simply a benignant of fraud wherever existing investors are paid with funds from caller investors, often promising artificially precocious rates of instrumentality with small risk. Santos was not named successful the SEC complaint.

Joseph Murray, an lawyer for Rep. Santos, told CNN successful an email connected Thursday that Santos was unaware of wrongdoing astatine the company.

“As to immoderate questions astir Harbor City Capital, successful airy of the ongoing investigation, and for the payment of the victims, it would beryllium inappropriate to respond different than to accidental that Congressman Santos was wholly unaware of immoderate amerciable enactment going connected astatine Harbor City Capital,” Murray told CNN.

Santos told The Daily Beast successful 2022 that helium was “as distraught and disturbed arsenic everyone else” to larn of allegations against Harbor City. But successful a since-removed tweet connected his since-deleted idiosyncratic Twitter account, a imaginable lawsuit questioned claims the institution had a 100% slope warrant connected their concern successful the signifier of a basal by enactment of recognition (SBLC).

“The marketplace instability is starring to sever (sic) superior erosion. @HarborCityCap offers you a strategy that mitigates nonaccomplishment and hazard portion creating currency flow, meantime your rule is 100% secured by an SBLC held by assorted large institutions. #fixedincome #alternativeinvestment #win,” Santos tweeted successful April 2020 nether the sanction George Devolder, utilizing his mother’s household name.

In June, a imaginable lawsuit responded to that tweet from Santos saying helium looked into a SBLC from Harbor City and recovered it to beryllium fraudulent.

“George, this SBLC I received from Harbor City was looked into, and Deutsche Bank claims is simply a implicit fraud and not signed by the slope serviceman connected the document. How bash you explicate this?,” the idiosyncratic said.

“I’m atrocious I’m not pursuing you. Could you delight nonstop maine an email astatine George.devolder@harborcity.com and we tin spell implicit this together. Our SBLC is 100% morganatic and issued by their institution. I look guardant to proceeding from you,” responded Santos.

In fact, according to the SEC complaint, “at nary point” was Harbor City Capital “ever issued a SBLC,” contempt claims from the company.

Dylan Riddle, a spokesperson for Deutsche Bank, told CNN connected Monday that they had nary affiliation with Harbor City Capital.

“Harbor City Capital was not a lawsuit of Deutsche Bank,” helium said.

Attorney Katherine C. Donlon, the court-appointed receiver for Harbor City Capital told CNN successful an email connected Friday Santos was affiliated with Harbor City Capital from mid January 2020 done April 2021.

On Wednesday, the Nassau County GOP and respective New York Republican congressmen called connected Santos to resign. Santos inactive has the tacit enactment of House Speaker Kevin McCarthy, who said it was up to the voters to decide.

In different media reviewed by CNN’s KFile from 2020, Santos called himself “the caput guy” astatine the Harbor City bureau successful New York and the enforcement astatine the company. In 1 2020 interview, Santos said helium managed a $1.5 cardinal money for the institution with returns of 12% and 26% connected investors’ money.

“Currently astatine Harbor City Capital, I negociate a 1.5 cardinal fund, right?,” said Santos. “And I cognize however to negociate it well. I springiness grounds returns to anybody who watches this, they’ll understand. I’m giving, a 12% fixed output income instrumentality a year, which cipher successful the market’s giving 4 and we’re giving 12. We’re besides giving up to 20 to 26% successful IRR instrumentality connected our investors’ capital. So if there’s thing I cognize however to do, it’s negociate dollars and turn them.”

The SEC filed a ailment in April 2021 against Harbor City Capital and laminitis Jonathan P. Maroney, alleging that Maroney raised $17.1 cardinal by deceiving much than 100 100 investors done a bid of unregistered fraudulent information offerings and utilized the wealth to enrich himself and his family. The SEC claimed that of the capitalist wealth collected and deposited into Harbor City Capital slope accounts “at most” lone $449,000 were utilized for concern expenses.

Neither Santos nor different Harbor City Capital employees were named successful the complaint.

In October, Maroney was granted a enactment successful national tribunal for the SEC’s civilian lawsuit, aft Maroney noted that helium “is presently the people successful a related transgression investigation.” He is representing himself successful the case.

CNN reached retired to Maroney for remark but did not person a response.