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HomeNEWSCompanies associated with troubled lawmaker George Santos come under examination. information that...

Companies associated with troubled lawmaker George Santos come under examination. information that is currently available.

The work George Santos claimed to have done for significant institutions was fraudulent, and his most recent professional experience all dates back to a fund that federal regulators labeled a Ponzi scam.

As the newly elected Republican faces growing political pressure to resign for making false claims about his history, companies connected to the beleaguered congressman George Santos have come under examination from politicians, regulators, and experts.

Since shortly after his victory in November, Santos, who represents New York City’s suburbs, has come under scrutiny for fabricating substantial portions of his school and employment history as well as amassing a sizable fortune almost overnight that he may have used to fund his campaign.

In addition to making up a bogus job history with well-known investment banks, Santos’ most recent professional background all goes back to a fund that was labeled a Ponzi scheme by federal regulators in a complaint from 2021 for taking money from new investors to repay the money from earlier investors. Independent experts claimed that the company’s claims, including several that Santos reiterated, raise serious questions.

In New York City, Santos claimed to have been in charge of the company’s operations, known as Harbor City Capital. During his initial run for Congress, he made several exaggerated claims about the business. Santos was not named as a defendant by the Securities and Exchange Commission, which claimed Santos was the beneficiary of Harbor City Capital’s $17.1 million fundraising effort.

Santos then enlisted the aid of a business connected to Harbor City Capital’s chief financial officer to launch a new business, Devolder Organization LLC. Santos claimed in financial declarations that Devolder Organization, the employer of him and paying him a salary of $750,000 annually, had grown to a value of between $1 million and $5 million almost instantly.

Then Redstone Strategies LLC, a related business, was co-founded by Devolder Organization. According to the New York Times, that business had a name similar to organizations that gathered funds for Santos’ campaign. A Democratic member of Congress has asked for a probe into possible violations of campaign financing laws.

According to the SEC complaint, Harbor City Capital, a company based in Melbourne, Florida, and its affiliates provided numerous investment opportunities with annual returns of 10% to 60% that would be paid in monthly installments before the customer’s initial investment was returned once the investments matured.

Mitchel Zuckoff, a journalism professor at Boston University and author of a book about the first Ponzi scheme, stated that when someone promises returns of 60%, it’s not as if there have never been investments that provide 60% legitimate returns. But because of how uncommon they are, the idea that they might just be accessible to you should instantly raise a whole carload of red lights.

According to the SEC, the company claimed it would use investor funds to help other businesses develop internet sales leads, which would subsequently be sold to corporate clients at a “significant profit.”

It is “dubious” that Harbor City Capital would have been able to complete those transactions, according to Kyle Welch, a George Washington University accounting professor with expertise in financial crime, who said that Facebook and Google have a monopoly on customer targeting.

The SEC’s complaint didn’t mention Santos by name. Both his lawyer and the office on Capitol Hill did not respond to messages.

At Harbor City Capital and Santos

Santos bragged about his work for Harbor City Capital during his first congressional campaign in a 2020 interview, falsely claiming that it was a Fortune 500 business and reiterating the lie that he had previously worked for J.P. Morgan and Goldman Sachs.

He added, “I arbitrage all of our fixed-income assets here in New York. “I’m the manager of Harbor City Capital’s New York City division. Our headquarters are in Melbourne, Florida. I have been employed by the company for just over a year.

Santos promoted the business on Twitter in April 2020. He added, “@HarborCityCap gives you a strategy that mitigates loss and risk while providing cash flow, while your principle (sic) is 100% covered by an SBLC held by several large institutions,” referring to a kind of security measure on an investment known as a standby letter of credit.

Santos may or may not have known about the Ponzi scam, according to Welch, but his claim was nonetheless troubling. “Your principal is protected?” Welch questioned. “The entire purpose of investing is to allow you to experience financial loss since that is how you may generate a return. Anyone with even a passing understanding of finance should flee when someone makes such a bold promise.”

Santos claimed in a video obtained by CNN that he ran a $1.5 billion fund for Harbor City Capital during the 2020 campaign and boasted about producing record returns. Nobody else in the market, he claimed, offers returns of 4 percent; we provide returns of 12 percent.

In addition, according to papers obtained by the New York Times that the authority has not independently evaluated, Santos claimed to an investor that he had personally raised $100 million for the fund. That is a significant increase beyond the $17.1 million the SEC reported was raised.

According to the Washington Post, the investor in question was the cousin and money manager of a Russian oligarch who has been subject to American sanctions.

What is known about Redstone and Devolder?

In 2021, about a month after the SEC’s lawsuit against Harbor City Capital was submitted, Santos registered Devolder Organization LLC, another Melbourne-based company. Another financial institution connected to Harbor City Capital’s chief financial officer served as the company’s registered agent. Santos was Devolder Organization LLC’s lone member.

Santos stated that he earned a $750,000 compensation through Devolder Organization LLC and that he was the sole owner of his 2022 financial reports, which are necessary for congressional candidates. He said that the business was worth between $1 million and $5 million and engaged in “capital intro consultancy,” which is a form of introduction between rich potential investors and hedge fund managers. 

For failing to submit its annual reports, the state of Florida disbanded the business. According to records with the secretary of state, Santos filed for the company’s reinstatement on December 20 using a different address—this one on Merritt Island, Florida.

In an interview with Semafor conducted in December, Santos explained what Devolder Organization does. He aided people in connecting with customers who were looking to buy expensive assets like yachts or planes.

He informed Semafor that his referral fee for a $20 million yacht might range from $200,000 to $400,000.

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