Home Miami Press Releases 2009 Former Fugitive Investment Manager Luis Giro Pleads Guilty to Securities Fraud
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Former Fugitive Investment Manager Luis Giro Pleads Guilty to Securities Fraud

U.S. Attorney’s Office June 23, 2009
  • Southern District of Florida (305) 961-9001

Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office, announced that defendant Luis Giro, a former Miami-based investment manager, pled guilty on June 22, 2009, to one count of securities fraud stemming from his 2003 Indictment. Giro had been a fugitive from justice until May 2009, when he was arrested by Venezuelan authorities and turned over to the custody of the FBI. At sentencing, Giro faces a maximum sentence of ten years’ imprisonment. Sentencing is scheduled for September 2, 2009, before U.S. District Court Judge Patricia A. Seitz.

At the change of plea hearing, Giro admitted that in approximately March 1997, he incorporated Giro Investments Group, Inc. (“Giro Investments Group”), which had as its principal place of business at Giro’s residence in Miami Springs, FL. Giro Investments Group held itself out as an “investment company” and “asset management firm” that traded in securities and foreign exchange contracts on behalf of its investors. Giro was the owner, President, and Chief Investment Officer of Giro Investments Group.

Starting at least as early November 1997, Giro began soliciting investors to invest money with Giro Investments Group in return for “guaranteed” annual yields or interest payments to investors of between 15% and 30%. Giro provided some prospective investors with at least one of several versions of an offering document that described Giro Investments Group as engaging in a “private offering for venture capital investment in Giro Investments Group.” The offering documents falsely represented that deposits with Giro Investments Group were either insured up to $100,000 by the FDIC or that deposits were insured up to $500,000 with a Financial Institution Bond. The offering documents also falsely assured investors that Giro Investments Group took a “conservative” approach to investing in the securities markets.

In furtherance of the fraudulent scheme, Giro falsely represented to prospective investors that investing with Giro Investments Group was “safe,” a “sure thing,” and involved “no risk.” Giro further falsely represented to prospective investors that Giro Investments Group acted as a “market maker” for TD Waterhouse, whereby TD Waterhouse provided Giro Investments Group with daily “contracts” to sell securities on behalf of TD Waterhouse. Giro falsely told investors that Giro Investments Group earned a guaranteed profit from these contracts regardless of whether the stock market increased or decreased in value on any given day. On occasion, Giro also falsely represented to investors that Giro Investments Group owned a seat on the New York Stock Exchange and that, as a result, he had inside information concerning the securities industry that he could use to benefit Giro Investments Group and its investors.

From approximately November 1997 through October 2001, Giro and Giro Investments Group received approximately $2,000,000 from around 15 investors. Giro would usually deposit the investors’ money in two bank accounts maintained by Giro Investments Group at Commercial Bank of Florida and Barnett Bank in Miami, FL. On several occasions, however, Giro deposited investors’ money into his personal bank account at Commercial Bank of Florida, which he then used to pay for personal expenses. Giro used a portion of the money he and Giro Investments Group received from investors to speculate in securities trading using a brokerage account in Giro Investments Group’s name at TD Waterhouse, a securities brokerage firm registered with U.S. Securities and Exchange Commission. However, Giro’s securities trading activity was largely unsuccessful and he lost at least $600,000 of investors’ money trading securities through the TD Waterhouse account. Giro did not disclose these losses to investors. In fact, he misrepresented to investors during the course of the scheme that he was making money trading securities.

In addition, of the approximately $2,000,000 received from investors, Giro misappropriated approximately $400,000 by making payments to third parties for a variety of business and personal expenses including, among other things, payments for employee salaries, taxes, health care insurance, car payments, and credit card expenses. Giro did not disclose to investors that he was using their funds to pay for these expenses incurred on behalf of himself and Giro Investments Group.

In furtherance of this scheme, Giro mailed investors monthly account statements and register reports specifying the purported balance of the investors’ accounts with Giro Investments Group and the purported monthly interest that their accounts had earned. These monthly account statements were false in that they showed that investors were earning a positive return on the money that they had entrusted to Giro Investments Group. In fact, however, Giro was steadily losing their money trading securities through the TD Waterhouse account and otherwise misappropriating their money.

In October 2001, Giro’s scheme fell apart when he ran out of funds having lost or misappropriated what remained of the investors’ funds. Shortly after the collapse of Giro Investments Group, Giro and his family left Miami and re-located to Venezuela, where he was recently arrested by the Venezuelan authorities and turned over to the custody of the FBI.

Mr. Sloman commended the investigative efforts of the FBI and the assistance of the Southeast Regional Office of the U.S. Securities and Exchange Commission, which had previously filed a civil enforcement action against Giro. The criminal case is being prosecuted by Assistant United States Attorney Harold E. Schimkat.

A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

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