The SEC alleges that PGI Global, claimed to be a crypto asset and foreign exchange trading company. From January 2020 until October 2021, Palafox offered and sold PGI Global “membership” packages, which he claimed guaranteed investors high returns from PGI Global’s supposed crypto asset and foreign exchange trading and offered members multi-level-marketing-like referral incentives to encourage them to recruit new investors. However, the Commission alleges, Palafox misappropriated more than USD57 million in investors' funds to buy Lamborghinis, items from luxury retailers and for other personal expenses. He also used the majority of the remaining funds to pay other investors their purported returns and referral rewards in a Ponzi-like scheme until its collapse in late 2021.

“Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed,” said Laura D’Allaird, Chief of the Commission’s new Cyber and Emerging Technologies Unit. “In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud.”

The Commission’s complaint, filed in the U.S. District Court for the Eastern District of Virginia, charges Palafox with breaches of the anti-fraud and registration provisions of federal securities laws. The complaint seeks permanent injunctive relief, conduct-based injunctions preventing Palafox from participating in multi-level-marketing programs involving the offer or sale of securities and offerings of crypto assets bought or sold as a security, surrender of ill-gotten gains with prejudgment interest and civil penalties. The complaint also names BBMR Threshold LLC, Darvie Mendoza, Marissa Mendoza Palafox and Linda Ventura as relief defendants and seeks surrender of their ill-gotten gains and prejudgment interest.

In a parallel action, Palafox was arraigned in U.S. District Court on criminal charges brought by the U.S. Attorney’s Office for the Eastern District of Virginia.

Further reading:

Relief Defendant Law and Legal Definition courtesy of https://definitions.uslegal.com/

A relief defendant is a person or entity who has received ill-gotten funds or assets as a result of the illegal acts of the other named defendants. A relief defendant is typically named because the plaintiff(s) seeks injunctive relief to protect the sought funds or assets and apply them to any eventual recovery in the case. A relief defendant may also be called a nominal defendant.