‘Ponzi-like’ scheme scammed immigrants, feds say. South Florida a hotbed of ‘affinity fraud’

It seemed like a preposterous investment opportunity, promising returns of 12.5% to 325% throughout the coronavirus pandemic.

But some 1,500 investors — mostly Haitian Americans in South Florida and others from Haiti, Canada and India — fell for the Broward County trucking company’s too-good-to-be-true sales pitch, U.S. authorities say.

The investors will now be lucky to recover dimes on the dollar, according to authorities. Federal authorities recently filed a criminal indictment and a civil complaint against the Coral Springs owner, Sanjay Singh, and his company, Royal Bengal Logistics Inc., alleging a conspiracy to raise $112 million from investors by using new ones to pay off old ones in a “Ponzi-like” scheme involving fraudulent wire transfers and securities violations.

In court papers, Singh, 43, is accused of misappropriating at least $14 million from investors for himself and diverting another $19 million of their funds into personal brokerage accounts that lost money. He was granted a $1 million bond after his arrest last week, and is scheduled for arraignment in Fort Lauderdale federal court Friday on conspiracy and wire fraud charges. Singh could not be reached for comment, and his criminal defense lawyers did not return phone and email messages for comment.

In a separate Securities and Exchange Commission civil complaint, Singh and his company are accused of fraudulently raising money from investors through unregistered securities and related violations.

‘Affinity fraud’ cons target immigrants

For decades, South Florida has been known as the nation’s con capital for its healthcare, income-tax and credit-card scams — not to mention high-end Ponzi schemes orchestrated by such notorious figures as Wall Street financier Bernard Madoff and Fort Lauderdale Scott Rothstein.

But the region has also become home to “affinity fraud,” authorities say, where investment schemers prey on unsuspecting immigrants and other minorities who tend to trust the perpetrators because they either know them or someone else who vouches for them. The Haitian American community has been hit particularly hard, but so have immigrants from Cuba, Colombia and Venezuela. Even the African-American and LGBTQ communities have been targets of affinity fraud.

“People automatically assume that because they are part of your community, whether it be a church, school or business, that it gives them an air of legitimacy,” said Eric Bustillo, director of the Securities and Exchange Commission’s Miami Regional Office. “They pull on these heritage strings that make investors want to invest with them.”

The SEC’s Miami office, through its Fraud Against Minority Groups Initiative, has become more vigilant about educating immigrant communities and others about affinity fraud and financial literacy over the past year. Nationwide, the SEC regularly issues an Investor Alert to warn immigrant communities in Florida, New York and other big states that they “should avoid investment decisions based solely on common ties with someone recommending or selling the investment.” The agency, which was formed during the Great Depression to regulate the securities industry, also conducts educational courses at schools, churches and other locations to inform immigrants about the perils of “affinity” investments.

“Just because someone is from your backyard, that doesn’t mean they’re offering you something that is not a fraudulent investment,” Bustillo told the Miami Herald. “You should still do your due diligence, your research, ask about the product, ask about the investment, ask if the investment broker is registered with the SEC, and ask if the product is registered with the SEC.”

“As the old adage goes, if it looks too good to be true, it probably is,” he added.

A string of fraud cases

While the SEC’s latest affinity-fraud case stands out for the size of the alleged Ponzi-like scheme and number of investors, the agency has pursued about a dozen similar enforcement actions over the past decade.

A year ago, for example, a Miami payday loan business was ordered to pay more than $39 million to hundreds of Venezuelan Americans in South Florida who lost a chunk of their money after investing in the company, according to a federal judge’s order. Sky Group USA, LLC, agreed to the final judgment with the Securities and Exchange Commission without admitting or denying violations of federal laws. Under similar settlement terms, Efrain Betancourt Jr., the CEO of Sky Group, also agreed to pay more than $6 million towards the total penalty. Betancourt, however, was not charged criminally.

Allegations of misleading investors

In Singh’s case, he is accused of conspiring with other employees, including Haitian Americans, at Royal Bengal to offer high-yield investments, promising investors that he would use their money to expand operations and increase the company’s purported fleet of 200 semi-trucks and trailers. Singh assured investors that his company was generating $650,000 to $1 million a month in revenue between 2019 and 2023 — and that their investments were safe and growing in value, according to court records.

During a November 2022 investor Zoom video conference, Singh boasted that Royal Bengal was a better company than Apple and Tesla.

“The fundamentals of this business can be trusted,” Singh said during the presentation. “So let’s move on from the point of view that [Royal] Bengal may last one day, two days — this is not Bitcoin. Our product is better than Apple. Our product is better than Tesla. You buy Apple, you buy Tesla, you start spending money. You buy [a] Royal Bengal [investment] contract, you start making money.”

Not exactly, according to federal authorities.

Singh and Royal Bengal are accused of fraudulently selling unregistered securities and other violations.

SEC investigators say Royal Bengal used about $70 million of new investors’ funds to make Ponzi-like payments to old investors — until the purported business model collapsed due to operating losses of $18 million since 2019. It is unclear how much each investor may have lost, but court records say that each one invested between $25,000 and $250,000 in Singh’s company.

A federal criminal indictment, which was filed by the U.S. Attorney’s Office following an FBI undercover investigation, names Singh as the sole defendant. A separate SEC complaint names Royal Bengal’s CEO and the company itself as defendants. In the SEC civil case, Singh’s wife, Sheetal, and Constantina Celicourt, the spouse of the firm’s vice president of business development, are named as relief defendants. (Her husband, Ricardi Celicourt, who public records show is a Royal Bengal executive, is not named in the SEC lawsuit.)

Singh’s wife, Sheetal, and Constantina Celicourt are not charged with any wrongdoing, but the SEC sued them to collect proceeds that authorities say they received from Singh’s alleged Ponzi-like scheme. Reached by phone at her Coconut Creek home, Celicourt said: “I don’t know anything about the case.”

Millions diverted to personal accounts

Of the roughly $14 million that Singh is accused of misappropriating from investors, $7.5 million was diverted to a joint bank account held by him and his wife, according to the SEC complaint. ln addition, Royal Bengal paid $2.1 million of investors’ funds to a Pompano Beach realty company to purchase a property in the name of Constantina Celicourt.

As a result of the enforcement action, Singh has lost control of his company. A receiver was appointed to oversee Royal Bengal by U.S. District Judge Raag Singhal in Fort Lauderdale federal court. The judge also froze Singh’s and the firm’s assets, including bank accounts and real estate, as part of the enforcement action brought by SEC lawyer Russell O’Brien.

In a court filing, O’Brien said their assets must be restrained to “prevent [them] from continuing to defraud investors in connection with their fraudulent offer and sale of securities, and to prevent them from further misuse and misappropriation of investor funds.”

If the SEC and federal prosecutors prevail in their parallel cases, it is likely that Singh, his company, his wife, and Celicourt will be required to pay back the money they’re accused of stealing from the Haitian American investors and other victims of the alleged investment scam. But, as past settlements typically indicate, the payback will fall far short of their losses.