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They promised to invest their clients' money in diversified holdings, but instead diverted nearly $6 million of investor money to pay for personal expenses, using other funds to repay earlier investors.
As these frauds all to often develop, the funds were used, in part, to repay earlier investors a la the infamous Ponzi scheme, and, in part, to pay of personal expenses of the masterminds of this fairly small minded fraud.
The complaint claims that Yohai "promises his investors a quick and large return on their investments," but when "financial performance fails to materialize and investors express their concerns," he recruits new investors and uses their funds to repay earlier ones.
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Only two days before, Brazil said it would repay early the $15.5 billion it owed the IMF.
The decision to repay early "was chiefly triggered by the increasing cost of the loans as their respective profitability recovers," analysts at Fitch Ratings wrote.
Fabrizio Goria (@FGoria) ICAP LTROO repayment expectations settle around the €100bn mark January 25 , 2013In deciding whether to repay early, banks must weigh up the desire to show shareholders, regulators and rating agencies that they are weaning themselves off central bank life support, against the fact that borrowing money elsewhere is generally much more expensive.
In perhaps the strongest sign yet that the Brazilian economy is recovering from last year's currency crisis, the country's central bank will repay early a large part of a $41.5 billion emergency loan package provided by the International Monetary Fund and other lenders.
And many banks have begun repaying early the cheap loans they took from the ECB over a year ago.
"Tesla is repaying early and it's a great vindication," said Greg Kats, president of Capital-E, a firm that invests in clean-energy companies.
"Others can use funds for great opportunities like getting a discount by paying cash, or buying in bulk, and then repaying early when the goods are sold," he said.
Bond issuers do the same thing by calling their bonds, repaying early and reissuing them at a lower rate.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com