SEC v. RICHARD DEMARIA, No. 1:12-cv-04145, Northern District of Illinois (May 30, 2012) — Complaint

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
_______________________________________
     :
UNITED STATES SECURITIES     :
AND EXCHANGE COMMISSION,  :
       :   CIVIL ACTION
  Plaintiff,    : FILE NO.
     :
 v.      :
       :
       :
RICHARD DEMARIA,    :
       :          J URY TRIAL DEMANDED
        :
  Defendant.    :
                                                                               :

COMPLAINT

Plaintiff United States Securities and Exchange Commission (“Commission”)
alleges as follows:
NATURE OF THE ACTION
1. Richard DeMaria (“DeMaria”), through his entities, operated a prime bank
scheme that defrauded at least thirteen investors out of approximately $4.3 million.
DeMaria enticed investors by making material misrepresentations in subscription
agreements concerning investments in financial instruments that do not exist.
DeMaria’s scheme involved enticing his investor victims to invest money with him to
purchase what the subscription agreements described as an “interest in a financial
instrument” for the purpose of generating a profit.  Instead of purchasing any financial
instruments, DeMaria misappropriated virtually all of the victims’ funds, put them in
bank accounts he controlled and spent them on himself.

2

2. DeMaria misappropriated at least $3.8 million of the investor funds.  He
used investor funds for, among other things, his personal use and to fund his other
business ventures.  For example, DeMaria used over $2 million to fund his real estate
business.  He also spent over $90,000 of investors’ money at a Chicago-area car
dealership that appears to specialize in the sale of sports cars.  DeMaria also used investor
funds for travel and expensive meals.
3. DeMaria used approximately $460,000 of the remaining investor funds to
form offshore entities and purportedly for expenses related to the acquisition of a
purported financial instrument.
4. As is typical in prime bank schemes, no financial instruments were ever
acquired and investors sought the return of their initial investments.  For several months
after raising money from investors, DeMaria, usually by email, attempted to lull nearly
all of the investors with promises that a deal to acquire a financial instrument pursuant to
the subscription agreements was imminent.  These promises were false.  DeMaria
misappropriated virtually all of the investor victims’ funds, caused those funds to be
deposited in accounts he controlled and spent the funds on himself.    Investors lost their
total investment.
5. When confronted with these allegations by the Commission staff, DeMaria
invoked his rights under the Fifth Amendment to the Constitution and refused to answer
any substantive questions during investigative testimony.
6. By virtue of his conduct, Defendant DeMaria has engaged in and, unless
enjoined, will continue to engage in transactions, acts, practices and courses of business
which violate Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933

3

(“Securities Act”) [15 U.S.C. §§ 77(q)(a)(1), 77(q)(a)(2) and 77(q)(a)(3)], Section 10(b)
of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule
10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder.
J URISDICTION AND VENUE
7. The Commission brings this action pursuant to Section 20(b) of the
Securities Act [15 U.S.C. § 77t(b)], Sections 21(d) and 21(e) of the Exchange Act [15
U.S.C. §§ 78u(d) and 78u(e)].
8. This Court has jurisdiction over this action pursuant to Section 22 of the
Securities Act [15 U.S.C. § 77v] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
9. Venue is proper in this Court pursuant to Section 22(a) of the Securities
Act [15 U.S.C. § 77(v)(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
10. Acts, practices and courses of business constituting violations alleged
herein have occurred within the jurisdiction of the United States District Court for the
Northern District of Illinois and elsewhere.
11. Defendant DeMaria, directly and indirectly, has made use of the means
and instrumentalities of interstate commerce and of the mails in connection with the acts,
practices, and courses of business alleged herein.
12. Defendant DeMaria will, unless enjoined, continue to engage in the acts,
practices and courses of business set forth in this Complaint, and acts, practices and
courses of business of similar purport and object.

4

13. Richar d DeMar ia, age 42, is a resident of Skokie, Illinois.  DeMaria
owned and/or controlled a number of entities that were used as part of the fraudulent
scheme alleged herein.
DEFENDANT
OTHER RELEVANT PARTIES

14. DeMaria Capital LLC (“DeMaria Capital”) was a limited liability
company registered in Illinois.  According to the Illinois Secretary of State website,
DeMaria Capital was involuntarily dissolved in December 2010.  DeMaria was the
manager of DeMaria Capital.
15.  Panorama Global Partners LLC (“PGP USA”) was a limited liability
company registered in Illinois.  According to the Illinois Secretary of State website, PGP
USA was involuntarily dissolved in March 2011.  DeMaria was the manager of PGP
USA.
16. Panorama Global Partners Inc. (“PGP BVI”) was a British Virgin
Islands corporation.  PGP BVI was a party to the subscription agreements signed by the
investors.  DeMaria was the managing director, president, vice president, secretary and
treasurer of PGP BVI.
17. Apex Capital Resour ces (“Apex”) was a British Virgin Islands
corporation.  Apex was a party to the subscription agreements signed by investors.
DeMaria was the director, president, vice president and secretary of Apex.
18. Dynamic Business Development (“DBD”) was a corporation registered
in Nevada.  According to the Nevada Secretary of State website, the status of DBD is
listed as “default.”

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19. Wisdom Financial Group (“Wisdom”) was a British Virgin Islands
entity used to facilitate the investors’ investments with DeMaria’s entities.
FACTS
20.     Beginning at least in August 2008, DeMaria used the mail and wires to
defraud at least 13 investors out of approximately $4.3 million.  DeMaria offered
investors fictitious investments in what the scheme’s subscription agreements
characterized as “financial instruments.”  The funds invested by DeMaria’s investor
victims were deposited in one of three bank accounts that DeMaria controlled.
21. Investment schemes like DeMaria’s are often referred to as “prime bank”
schemes.  Several government agencies, including the Commission, the U.S. Department
of Treasury, and the Federal Bureau of Investigation, have posted investor alerts and
warnings about fictitious “prime bank” investments on their publicly available websites.
22. According to the subscription agreement given to the victims, their money
would be used to purchase a “financial instrument.”  According to emails that DeMaria
sent to investors after they made their investments, DeMaria stated that he would oversee
the acquisition of a financial instrument that would be placed in what he vaguely
described as a “trading platform.”  DeMaria represented that the placement of the
financial instrument would generate “cash flow” for the investors
23. Investor victims, who are located throughout the United States and
Europe, were steered to DeMaria by DBD.  Ten of the thirteen investors are U.S. citizens
who reside in the United States and one is a foreign citizen with an address in the United
States.

6

24. To further his scheme, DeMaria required investors to pay him a fee
purportedly for the formation of offshore entities on their behalf.  These investors would
then own shares in the offshore entities that were formed as part of the scheme.
According to the subscription agreements, t  hese entities were supposedly formed to “own
the investment” and to receive any income “generated by the investment.”
25.  As represented to investors in the amended subscription agreements, the
offshore entities purportedly could not be used to acquire the financial instrument
because of BVI banking requirements and regulations.  As such, DeMaria advised
investors that they would need to purchase shares in yet another offshore entity, Wisdom.
Again, this entity was formed for the purported purpose of acquiring a financial
instrument.  The investors purchased shares in Wisdom pursuant to a subscription
agreement they entered into with Wisdom.
26. Instead of using investor funds to acquire “financial instruments” as stated
in the subscription agreements, DeMaria misappropriated at least $3.8 million of the
funds raised.  DeMaria used these investor funds for his personal use and to fund his
other business ventures.  The investors lost all of their money.
A. The Original Subscription Agreement
27.  Investors made their investments through a complex and confusing series
of subscription agreements.  Between August 2008 and October 2008, with one
exception, all investors entered into subscription agreements with PGP BVI or Apex, all
companies controlled by DeMaria.  Based on bank records, investors made a minimum
investment of $250,000 in connection with the acquisition of the purported “financial
instruments.”

7

28. Under these agreements, each investor paid DeMaria a non-refundable
$25,000 fee to form a British Virgin Islands (“BVI”) entity on behalf of the investor.  The
agreements instructed investors to wire the fee to one of two bank accounts located in the
United States in the name of DeMaria Capital or PGP USA, or a bank account in the
name of PGP BVI located in the BVI.  DeMaria controlled each of these bank accounts.
The subscription agreements stated that this fee purportedly covered the costs of
establishing the corporation and a bank account as well as related costs.
29. According to the subscription agreement given to investors, the purported
purpose of the BVI entity was to acquire an interest in a foreign financial instrument such
as a cash-backed guarantee.  The subscription agreements set forth the terms and
conditions under which the investors were prepared to invest funds for the purpose of
obtaining ownership of a BVI corporation jointly owned by PGP BVI or Apex, DBD and
the investor.
30. In emails sent by DeMaria to investors, DeMaria claimed that he would
generate profits on behalf of the investors by placing the financial instrument in a
“trading platform.”
31. According to the subscription agreements, any shares in the corporation
and any net profits would be split as follows:  PGP BVI or Apex would receive 47.5%,
the investor would also receive 47.5%, and DBD would receive 5%.  With the exception
of the non-refundable fee paid to DeMaria, this is the only compensation that PGP BVI,
Apex and DBD were entitled to receive under the subscription agreements.

8

32. The subscription agreement also contained a confidentiality clause stating
that the investments were  highly confidential and prohibiting investors  from disclosing
any information related to the agreement.
33. DeMaria signed these agreements on behalf of PGP BVI and Apex as the
managing director.
B.  The Amended Subscription Agr eements

34. DeMaria later represented to investors, through amended subscription
agreements, that he was unable to establish bank accounts for the BVI corporations,
purportedly due to BVI banking requirements and regulations.
35. As such, DeMaria advised investors to become shareholders of Wisdom,
also a BVI corporation, to facilitate the purported transaction.
36. Around December 2008, the original subscription agreements were
amended by other agreements entered into by DeMaria and the investors.
37. The amended agreements stated that funds previously deposited would be
used to acquire what the subscription agreement described as a “cash-backed bank
guarantee.”
38. Pursuant to the amended agreements, the investor also agreed that his or
her corporation would enter into a second subscription agreement for the purchase of
shares of Wisdom.
39. DeMaria signed the amended subscription agreements on behalf of PGP
BVI and Apex as the president.

9

C. The Wisdom Agr eements
40. In December 2008, eleven of the thirteen investors entered into a separate
subscription agreement with Wisdom as set forth in the amended subscription
agreements.  The two other investors continued to work with DeMaria directly.
41. In the Wisdom agreements, the investors agreed that the funds previously
transferred (i.e., the minimum $250,000 investment) to DeMaria would be used to
purchase shares in Wisdom.
42. The agreements further stated that Wisdom would acquire an interest in a
“cash-backed guarantee.”  The agreements also stated that Wisdom would enter into a
separate agreement with PGP BVI, which would acquire the “cash-backed guarantee”
and place it with a “third party experienced in private placement investments.”
43. The Wisdom agreements also contained a confidentiality clause similar to
that of the initial subscription agreements.
44. These agreements were signed by the investors and the “organizer” of
Wisdom.
D. DeMaria’s Misappropriation of Investor Funds
45. Instead of using investor funds to acquire a financial instrument as he
represented to investors in the subscription agreements, DeMaria misappropriated almost
all of the investor funds.
46. DeMaria raised approximately $4.3 million from thirteen investors which
were placed in bank accounts he controlled.  These funds were deposited in either one of
two bank accounts located in the United States in the name of DeMaria Capital or PGP

10

USA, or a bank account in the name of PGP BVI located in the BVI.  DeMaria controlled
each of these bank accounts.
47. Of the $4.3 million, approximately $460,000 was paid to various
individuals and entities by DeMaria in a supposed effort to form the BVI entities or to
purportedly acquire a financial instrument.  In reality, however, no such financial
instruments ever acquired by DeMaria.
48. DeMaria misappropriated at least the remaining $3.8 million of investor
funds for his own personal use and to fund his other businesses.
49. Over $2 million of investor funds was used by DeMaria to fund his now-
defunct real estate business.  Also, approximately $180,000 was transferred to DeMaria’s
personal bank accounts.
50. DeMaria also used money to fund a lavish lifestyle.  For example, he spent
over $90,000 in investor funds at a Chicago-area car dealership which appears to
specialize in the sale of sports cars.  DeMaria also used investor funds for travel and
expensive meals.
E. DeMaria Deceived Investors About the Status of Their Purported
Investments
51. After learning that DeMaria did not actually acquire a ny financial
instrument, investors began to request the return of their investments.
52. In order to placate investors, DeMaria sent several letters and emails
promising the return of their money and representing that he was on the verge of
completing a transaction to acquire a financial instrument that would provide them with
profits.

11

53. For example, in an email, DeMaria claimed that he was unable to return
investor funds because he had advanced the money to what he said appeared to be
legitimate investments.  This was false given that DeMaria had already misappropriated
most of the investor funds.
54. DeMaria has failed to return any money to investors.
F.   DeMaria has Refused to Answer Any Questions About His Scheme
55. When confronted with these allegations by Commission staff, DeMaria
invoked his rights under the Fifth Amendment to the Constitution and refused to answer
any substantive questions during investigative testimony.
COUNT I

Violations of Section 17(a)(1) of the Secur ities Act

56. Paragraphs 1 through 56 are realleged and incorporated by reference as
though fully set forth herein.
57. By engaging in the conduct described above, Defendant DeMaria, in the
offer and sale of securities, by the use of the means and instruments of transportation or
communication in interstate commerce or by use of the mails, directly or indirectly, has
employed devices, schemes and artifices to defraud.
58. Defendant DeMaria acted with scienter.
59. By reason of the foregoing, Defendant DeMaria has violated Section
17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)].

12

COUNT II
Violation of Section 17(a)(2) of the Secur ities Act

60. Paragraphs 1 through 60 are realleged and incorporated by reference as
though fully set forth herein.
61. By engaging in the conduct described above, Defendant DeMaria, in the
offer and sale of securities, by the use of the means and instruments of transportation or
communication in interstate commerce or by use of the mails, directly or indirectly, has
obtained money or property by means of untrue statements of material fact or by omitting
to state material facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
62. By reason of the foregoing, Defendant DeMaria has violated Section
17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2].
COUNT III
Violations of Section 17(a)(3) of the Secur ities Act

63. Paragraphs 1 through 63 are realleged and incorporated by reference as
though fully set forth herein.
64. By engaging in the conduct described above, Defendant DeMaria, in the
offer and sale of securities, by the use of the means and instruments of transportation or
communication in interstate commerce or by use of the mails, directly or indirectly, has
engaged in transactions, practices, or courses of business that operated or would operate
as a fraud or deceit upon the purchasers of such securities.
65. By reason of the foregoing, Defendant DeMaria has violated Section
17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)].

13

COUNT IV
Violations of Section 10(b) of the Exchange Act,
and Exchange Act Rule 10b-5(a), (b) and (c)

66. Paragraphs 1 through 63 are realleged and incorporated by reference.
67. As more fully described in paragraphs 1 through 56 above, Defendant
DeMaria, in connection with the purchase and sale of securities, by the use of the means
and instrumentalities of interstate commerce and by the use of the mails, directly and
indirectly: used and employed devices, schemes and artifices to defraud; made untrue
statements of material fact and omitted to state material facts necessary in order to make
the statements made, in light of the circumstances under which they were made, not
misleading; and engaged in acts, practices and courses of business which operated or
would have operated as a fraud and deceit upon purchasers and sellers and prospective
purchasers and sellers of securities.
68. As part of and in furtherance of his scheme, Defendant DeMaria directly
and indirectly, prepared, disseminated, or used contracts, investor and other
correspondence, and oral presentations, which contained untrue statements of material
facts and misrepresentations of material facts, and which omitted to state material facts
necessary in order to make the statements made, in light of the circumstances under
which they were made, not misleading, including, but not limited to, those set forth in
paragraphs 1 through 56 above.
69. Defendant DeMaria acted with scienter.
70. By reason of the foregoing, Defendant DeMaria violated Section 10(b) of
the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5(a), (b) and (c) thereunder [17
C.F.R. 240.10b-5(a), (b) and (c)].

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RELIEF REQUESTED
 WHEREFORE, the Commission respectfully requests that this Court:
I.
 Issue findings of fact and conclusions of law that Defendant DeMaria committed
the violations charged and alleged herein.
II.
Grant an Order of Permanent Injunction, in a form consistent with Rule 65(d) of
the Federal Rules of Civil Procedure, restraining and enjoining Defendant DeMaria, his
officers, agents, servants, employees, attorneys and those persons in active concert or
participation with them who receive actual notice of the Order, by personal service or
otherwise, and each of them from, directly or indirectly, engaging in the transactions,
acts, practices or courses of business described above, or in conduct of similar purport
and object, in violation of  Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)],
Section 10(b) of the Exchange Act [15 U.S.C. § 78j] and Rule 10b-5 [17 CFR § 240.10b-
5] thereunder.
III.
Issue an Order requiring Defendant DeMaria to disgorge the ill-gotten gains that
they received as a result of the violations alleged in this Complaint, including
prejudgment interest.
IV.
With regard to DeMaria’s violative acts, practices and courses of business set
forth herein, issue an Order imposing upon DeMaria appropriate civil penalties pursuant

15

to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the
Exchange Act [15 U.S.C. § 78u(d)(3)].
V.
  Retain jurisdiction of this action in accordance with the principles of equity and
the Federal Rules of Civil Procedure in order to implement and carry out the terms of all
orders and decrees that may be entered or to entertain any suitable application or motion
for additional relief within the jurisdiction of this Court.
VI.
Grant an Order for any other relief this Court deems appropriate.
Respectfully submitted,

Dated: May 29, 2012    /s/ Gregory P. von Schaumburg

Gregory P. von Schaumburg
[email protected]
Natalie G. Garner
[email protected]
Charles J. Kerstetter
[email protected]
Attorneys for Plaintiff
U.S. Securities and Exchange Commission
Chicago Regional Office
175 West Jackson Blvd.
Suite 900
Chicago, Illinois 60604
(312) 353-7390

UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 
_______________________________________ 

     : 
UNITED STATES SECURITIES   : 
AND EXCHANGE COMMISSION,  : 
       :   CIVIL ACTION  
  Plaintiff,    : FILE NO. 

     :   
 v.      :       
       : 
       : 
RICHARD DEMARIA,    :  
       :       JURY TRIAL DEMANDED 
        :   
  Defendant.    :   
                                                                               : 
 

 
 

COMPLAINT 
   

Plaintiff United States Securities and Exchange Commission (“Commission”) 

alleges as follows: 

NATURE OF THE ACTION 

1. Richard DeMaria (“DeMaria”), through his entities, operated a prime bank 

scheme that defrauded at least thirteen investors out of approximately $4.3 million.  

DeMaria enticed investors by making material misrepresentations in subscription 

agreements concerning investments in financial instruments that do not exist.  

DeMaria’s scheme involved enticing his investor victims to invest money with him to 

purchase what the subscription agreements described as an “interest in a financial 

instrument” for the purpose of generating a profit.  Instead of purchasing any financial 

instruments, DeMaria misappropriated virtually all of the victims’ funds, put them in 

bank accounts he controlled and spent them on himself. 

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2 

 
 

 

2. DeMaria misappropriated at least $3.8 million of the investor funds.  He 

used investor funds for, among other things, his personal use and to fund his other 

business ventures.  For example, DeMaria used over $2 million to fund his real estate 

business.  He also spent over $90,000 of investors’ money at a Chicago-area car 

dealership that appears to specialize in the sale of sports cars.  DeMaria also used investor 

funds for travel and expensive meals. 

3. DeMaria used approximately $460,000 of the remaining investor funds to 

form offshore entities and purportedly for expenses related to the acquisition of a  

purported financial instrument. 

4. As is typical in prime bank schemes, no financial instruments were ever 

acquired and investors sought the return of their initial investments.  For several months 

after raising money from investors, DeMaria, usually by email, attempted to lull nearly 

all of the investors with promises that a deal to acquire a financial instrument pursuant to 

the subscription agreements was imminent.  These promises were false.  DeMaria 

misappropriated virtually all of the investor victims’ funds, caused those funds to be 

deposited in accounts he controlled and spent the funds on himself.  Investors lost their 

total investment. 

5. When confronted with these allegations by the Commission staff, DeMaria 

invoked his rights under the Fifth Amendment to the Constitution and refused to answer 

any substantive questions during investigative testimony. 

6. By virtue of his conduct, Defendant DeMaria has engaged in and, unless 

enjoined, will continue to engage in transactions, acts, practices and courses of business 

which violate Sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Securities Act of 1933 

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(“Securities Act”) [15 U.S.C. §§ 77(q)(a)(1), 77(q)(a)(2) and 77(q)(a)(3)], Section 10(b) 

of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 

10b-5 [17 C.F.R. § 240.10b-5] promulgated thereunder.   

JURISDICTION AND VENUE 

7. The Commission brings this action pursuant to Section 20(b) of the 

Securities Act [15 U.S.C. § 77t(b)], Sections 21(d) and 21(e) of the Exchange Act [15 

U.S.C. §§ 78u(d) and 78u(e)]. 

8. This Court has jurisdiction over this action pursuant to Section 22 of the 

Securities Act [15 U.S.C. § 77v] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 

9. Venue is proper in this Court pursuant to Section 22(a) of the Securities 

Act [15 U.S.C. § 77(v)(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  

10. Acts, practices and courses of business constituting violations alleged 

herein have occurred within the jurisdiction of the United States District Court for the 

Northern District of Illinois and elsewhere.     

11. Defendant DeMaria, directly and indirectly, has made use of the means 

and instrumentalities of interstate commerce and of the mails in connection with the acts, 

practices, and courses of business alleged herein.   

12. Defendant DeMaria will, unless enjoined, continue to engage in the acts, 

practices and courses of business set forth in this Complaint, and acts, practices and 

courses of business of similar purport and object. 

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13. Richard DeMaria, age 42, is a resident of Skokie, Illinois.  DeMaria 

owned and/or controlled a number of entities that were used as part of the fraudulent 

scheme alleged herein.    

DEFENDANT 

OTHER RELEVANT PARTIES 
 

14. DeMaria Capital LLC (“DeMaria Capital”) was a limited liability 

company registered in Illinois.  According to the Illinois Secretary of State website, 

DeMaria Capital was involuntarily dissolved in December 2010.  DeMaria was the 

manager of DeMaria Capital. 

15.  Panorama Global Par tners LLC (“PGP USA”) was a limited liability 

company registered in Illinois.  According to the Illinois Secretary of State website, PGP 

USA was involuntarily dissolved in March 2011.  DeMaria was the manager of PGP 

USA. 

16. Panorama Global Par tners Inc. (“PGP BVI”) was a British Virgin 

Islands corporation.  PGP BVI was a party to the subscription agreements signed by the 

investors.  DeMaria was the managing director, president, vice president, secretary and 

treasurer of PGP BVI. 

17. Apex Capital Resources (“Apex”) was a British Virgin Islands 

corporation.  Apex was a party to the subscription agreements signed by investors.  

DeMaria was the director, president, vice president and secretary of Apex. 

18. Dynamic Business Development (“DBD”) was a corporation registered 

in Nevada.  According to the Nevada Secretary of State website, the status of DBD is 

listed as “default.” 

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5 

 
 

 

19. Wisdom Financial Group (“Wisdom”) was a British Virgin Islands 

entity used to facilitate the investors’ investments with DeMaria’s entities. 

FACTS 

20.     Beginning at least in August 2008, DeMaria used the mail and wires to 

defraud at least 13 investors out of approximately $4.3 million.  DeMaria offered 

investors fictitious investments in what the scheme’s subscription agreements 

characterized as “financial instruments.”  The funds invested by DeMaria’s investor 

victims were deposited in one of three bank accounts that DeMaria controlled.   

21. Investment schemes like DeMaria’s are often referred to as “prime bank” 

schemes.  Several government agencies, including the Commission, the U.S. Department 

of Treasury, and the Federal Bureau of Investigation, have posted investor alerts and 

warnings about fictitious “prime bank” investments on their publicly available websites.   

22. According to the subscription agreement given to the victims, their money 

would be used to purchase a “financial instrument.”  According to emails that DeMaria 

sent to investors after they made their investments, DeMaria stated that he would oversee 

the acquisition of a financial instrument that would be placed in what he vaguely 

described as a “trading platform.”  DeMaria represented that the placement of the 

financial instrument would generate “cash flow” for the investors 

23. Investor victims, who are located throughout the United States and 

Europe, were steered to DeMaria by DBD.  Ten of the thirteen investors are U.S. citizens 

who reside in the United States and one is a foreign citizen with an address in the United 

States. 

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6 

 
 

 

24. To further his scheme, DeMaria required investors to pay him a fee 

purportedly for the formation of offshore entities on their behalf.  These investors would 

then own shares in the offshore entities that were formed as part of the scheme.  

According to the subscription agreements, these entities were supposedly formed to “own 

the investment” and to receive any income “generated by the investment.”   

25.  As represented to investors in the amended subscription agreements, the 

offshore entities purportedly could not be used to acquire the financial instrument 

because of BVI banking requirements and regulations.  As such, DeMaria advised 

investors that they would need to purchase shares in yet another offshore entity, Wisdom.  

Again, this entity was formed for the purported purpose of acquiring a financial 

instrument.  The investors purchased shares in Wisdom pursuant to a subscription 

agreement they entered into with Wisdom.  

26. Instead of using investor funds to acquire “financial instruments” as stated 

in the subscription agreements, DeMaria misappropriated at least $3.8 million of the 

funds raised.  DeMaria used these investor funds for his personal use and to fund his 

other business ventures.  The investors lost all of their money. 

A. The Original Subscr iption Agreement 

27.  Investors made their investments through a complex and confusing series 

of subscription agreements.  Between August 2008 and October 2008, with one 

exception, all investors entered into subscription agreements with PGP BVI or Apex, all 

companies controlled by DeMaria.  Based on bank records, investors made a minimum 

investment of $250,000 in connection with the acquisition of the purported “financial 

instruments.”  

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7 

 
 

 

28. Under these agreements, each investor paid DeMaria a non-refundable 

$25,000 fee to form a British Virgin Islands (“BVI”) entity on behalf of the investor.  The 

agreements instructed investors to wire the fee to one of two bank accounts located in the 

United States in the name of DeMaria Capital or PGP USA, or a bank account in the 

name of PGP BVI located in the BVI.  DeMaria controlled each of these bank accounts.  

The subscription agreements stated that this fee purportedly covered the costs of 

establishing the corporation and a bank account as well as related costs. 

29. According to the subscription agreement given to investors, the purported 

purpose of the BVI entity was to acquire an interest in a foreign financial instrument such 

as a cash-backed guarantee.  The subscription agreements set forth the terms and 

conditions under which the investors were prepared to invest funds for the purpose of 

obtaining ownership of a BVI corporation jointly owned by PGP BVI or Apex, DBD and 

the investor. 

30. In emails sent by DeMaria to investors, DeMaria claimed that he would 

generate profits on behalf of the investors by placing the financial instrument in a 

“trading platform.” 

31. According to the subscription agreements, any shares in the corporation 

and any net profits would be split as follows:  PGP BVI or Apex would receive 47.5%, 

the investor would also receive 47.5%, and DBD would receive 5%.  With the exception 

of the non-refundable fee paid to DeMaria, this is the only compensation that PGP BVI, 

Apex and DBD were entitled to receive under the subscription agreements. 

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32. The subscription agreement also contained a confidentiality clause stating 

that the investments were  highly confidential and prohibiting investors  from disclosing 

any information related to the agreement. 

33. DeMaria signed these agreements on behalf of PGP BVI and Apex as the 

managing director. 

B.  The Amended Subscr iption Agreements 
 

34. DeMaria later represented to investors, through amended subscription 

agreements, that he was unable to establish bank accounts for the BVI corporations, 

purportedly due to BVI banking requirements and regulations.     

35. As such, DeMaria advised investors to become shareholders of Wisdom, 

also a BVI corporation, to facilitate the purported transaction. 

36. Around December 2008, the original subscription agreements were 

amended by other agreements entered into by DeMaria and the investors.   

37. The amended agreements stated that funds previously deposited would be 

used to acquire what the subscription agreement described as a “cash-backed bank 

guarantee.” 

38. Pursuant to the amended agreements, the investor also agreed that his or 

her corporation would enter into a second subscription agreement for the purchase of 

shares of Wisdom. 

39. DeMaria signed the amended subscription agreements on behalf of PGP 

BVI and Apex as the president. 

 

 

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C. The Wisdom Agreements 

40. In December 2008, eleven of the thirteen investors entered into a separate 

subscription agreement with Wisdom as set forth in the amended subscription 

agreements.  The two other investors continued to work with DeMaria directly. 

41. In the Wisdom agreements, the investors agreed that the funds previously 

transferred (i.e., the minimum $250,000 investment) to DeMaria would be used to 

purchase shares in Wisdom.   

42. The agreements further stated that Wisdom would acquire an interest in a 

“cash-backed guarantee.”  The agreements also stated that Wisdom would enter into a 

separate agreement with PGP BVI, which would acquire the “cash-backed guarantee” 

and place it with a “third party experienced in private placement investments.” 

43. The Wisdom agreements also contained a confidentiality clause similar to 

that of the initial subscription agreements. 

44. These agreements were signed by the investors and the “organizer” of 

Wisdom. 

D. DeMaria’s Misappropr iation of Investor  Funds 

45. Instead of using investor funds to acquire a financial instrument as he 

represented to investors in the subscription agreements, DeMaria misappropriated almost 

all of the investor funds. 

46. DeMaria raised approximately $4.3 million from thirteen investors which 

were placed in bank accounts he controlled.  These funds were deposited in either one of 

two bank accounts located in the United States in the name of DeMaria Capital or PGP 

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USA, or a bank account in the name of PGP BVI located in the BVI.  DeMaria controlled 

each of these bank accounts. 

47. Of the $4.3 million, approximately $460,000 was paid to various 

individuals and entities by DeMaria in a supposed effort to form the BVI entities or to 

purportedly acquire a financial instrument.  In reality, however, no such financial 

instruments ever acquired by DeMaria. 

48. DeMaria misappropriated at least the remaining $3.8 million of investor 

funds for his own personal use and to fund his other businesses. 

49. Over $2 million of investor funds was used by DeMaria to fund his now-

defunct real estate business.  Also, approximately $180,000 was transferred to DeMaria’s 

personal bank accounts. 

50. DeMaria also used money to fund a lavish lifestyle.  For example, he spent 

over $90,000 in investor funds at a Chicago-area car dealership which appears to 

specialize in the sale of sports cars.  DeMaria also used investor funds for travel and 

expensive meals. 

E. DeMaria Deceived Investors About the Status of Their  Purpor ted 
Investments 

51. After learning that DeMaria did not actually acquire any financial 

instrument, investors began to request the return of their investments. 

52. In order to placate investors, DeMaria sent several letters and emails 

promising the return of their money and representing that he was on the verge of 

completing a transaction to acquire a financial instrument that would provide them with 

profits. 

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53. For example, in an email, DeMaria claimed that he was unable to return 

investor funds because he had advanced the money to what he said appeared to be 

legitimate investments.  This was false given that DeMaria had already misappropriated 

most of the investor funds. 

54. DeMaria has failed to return any money to investors. 

F.   DeMaria has Refused to Answer Any Questions About His Scheme 

55. When confronted with these allegations by Commission staff, DeMaria 

invoked his rights under the Fifth Amendment to the Constitution and refused to answer 

any substantive questions during investigative testimony. 

COUNT I 
 

Violations of Section 17(a)(1) of the Secur ities Act 
 

56. Paragraphs 1 through 56 are realleged and incorporated by reference as 

though fully set forth herein. 

57. By engaging in the conduct described above, Defendant DeMaria, in the 

offer and sale of securities, by the use of the means and instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, has 

employed devices, schemes and artifices to defraud. 

58. Defendant DeMaria acted with scienter.   

59. By reason of the foregoing, Defendant DeMaria has violated Section 

17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. 

 

 

 

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COUNT II 

Violation of Section 17(a)(2) of the Secur ities Act 
 

60. Paragraphs 1 through 60 are realleged and incorporated by reference as 

though fully set forth herein. 

61. By engaging in the conduct described above, Defendant DeMaria, in the 

offer and sale of securities, by the use of the means and instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, has 

obtained money or property by means of untrue statements of material fact or by omitting 

to state material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading.  

62. By reason of the foregoing, Defendant DeMaria has violated Section 

17(a)(2) of the Securities Act [15 U.S.C. § 77q(a)(2]. 

COUNT III 

Violations of Section 17(a)(3) of the Secur ities Act 
 

63. Paragraphs 1 through 63 are realleged and incorporated by reference as 

though fully set forth herein. 

64. By engaging in the conduct described above, Defendant DeMaria, in the 

offer and sale of securities, by the use of the means and instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, has 

engaged in transactions, practices, or courses of business that operated or would operate 

as a fraud or deceit upon the purchasers of such securities.    

65. By reason of the foregoing, Defendant DeMaria has violated Section 

17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)]. 

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COUNT IV 

Violations of Section 10(b) of the Exchange Act, 
and Exchange Act Rule 10b-5(a), (b) and (c)  

 

66. Paragraphs 1 through 63 are realleged and incorporated by reference. 

67. As more fully described in paragraphs 1 through 56 above, Defendant 

DeMaria, in connection with the purchase and sale of securities, by the use of the means 

and instrumentalities of interstate commerce and by the use of the mails, directly and 

indirectly: used and employed devices, schemes and artifices to defraud; made untrue 

statements of material fact and omitted to state material facts necessary in order to make 

the statements made, in light of the circumstances under which they were made, not 

misleading; and engaged in acts, practices and courses of business which operated or 

would have operated as a fraud and deceit upon purchasers and sellers and prospective 

purchasers and sellers of securities. 

68. As part of and in furtherance of his scheme, Defendant DeMaria directly 

and indirectly, prepared, disseminated, or used contracts, investor and other 

correspondence, and oral presentations, which contained untrue statements of material 

facts and misrepresentations of material facts, and which omitted to state material facts 

necessary in order to make the statements made, in light of the circumstances under 

which they were made, not misleading, including, but not limited to, those set forth in 

paragraphs 1 through 56 above.  

69. Defendant DeMaria acted with scienter. 

70. By reason of the foregoing, Defendant DeMaria violated Section 10(b) of 

the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5(a), (b) and (c) thereunder [17 

C.F.R. 240.10b-5(a), (b) and (c)]. 

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RELIEF REQUESTED 

 WHEREFORE, the Commission respectfully requests that this Court: 

I.  

 Issue findings of fact and conclusions of law that Defendant DeMaria committed 

the violations charged and alleged herein. 

II.  

Grant an Order of Permanent Injunction, in a form consistent with Rule 65(d) of 

the Federal Rules of Civil Procedure, restraining and enjoining Defendant DeMaria, his 

officers, agents, servants, employees, attorneys and those persons in active concert or 

participation with them who receive actual notice of the Order, by personal service or 

otherwise, and each of them from, directly or indirectly, engaging in the transactions, 

acts, practices or courses of business described above, or in conduct of similar purport 

and object, in violation of  Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j] and Rule 10b-5 [17 CFR § 240.10b-

5] thereunder. 

III. 

Issue an Order requiring Defendant DeMaria to disgorge the ill-gotten gains that 

they received as a result of the violations alleged in this Complaint, including 

prejudgment interest. 

IV. 

With regard to DeMaria’s violative acts, practices and courses of business set 

forth herein, issue an Order imposing upon DeMaria appropriate civil penalties pursuant 

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to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the 

Exchange Act [15 U.S.C. § 78u(d)(3)]. 

V. 

  Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of all 

orders and decrees that may be entered or to entertain any suitable application or motion 

for additional relief within the jurisdiction of this Court. 

VI. 

Grant an Order for any other relief this Court deems appropriate. 

Respectfully submitted, 

 
Dated: May 29, 2012   /s/ Gregory P. von Schaumburg 

Gregory P. von Schaumburg 
[email protected]  
Natalie G. Garner 
[email protected]  
Charles J. Kerstetter 
[email protected]  
Attorneys for Plaintiff 
U.S. Securities and Exchange Commission 
Chicago Regional Office 
175 West Jackson Blvd. 
Suite 900 
Chicago, Illinois 60604 
(312) 353-7390  

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