The Securities and Exchange Commission filed a civil action in the United States District Court for the Southern District of Florida against InnoVida Holdings LLC, its former CEO Claudio Osorio and its former CFO Craig Toll, CPA, charging them with defrauding investors in an offering fraud scheme. Osorio was an Ernst & Young "Entrepreneur of the Year" award winner in 1997. Separately, the U.S. Attorney's Office for the Southern District of Florida today announced criminal charges against Osorio and Toll.
The Commission's complaint alleges that from at least 2007 to April 2010, InnoVida, Osorio and Toll perpetrated an offering fraud that raised at least $16.8 million mainly from investors located in Miami, Florida. According to the SEC's complaint, InnoVida, a manufacturer of alternative housing structures, claimed that its product was fire and hurricane proof and could be produced at economically advantageous prices. The SEC's complaint alleges that Osorio used fraudulent pro forma financial statements to persuade investors to fund InnoVida's alternative housing business. According to the complaint, Toll prepared the pro formas, which falsely reflected that InnoVida had more than $35 million in cash and cash equivalents in its bank accounts, and more than $100 million in equity.
The complaint also alleges that Osorio lied to investors when he told them that he had personally invested tens of millions of his own money into InnoVida, that InnoVida was valued at as high as $250 million, and that a third-party was about to make a substantial investment in InnoVida that would benefit current investors. Further, the complaint alleges that Osorio diverted at least $8.1 million of investor monies to fund his lavish lifestyle. According to the complaint, Osorio was active in local and national fundraising and was able to recruit a high-profile board of directors for InnoVida.
The SEC's complaint charges the defendants with violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC's complaint, seeks disgorgement of ill-gotten gains, financial penalties, and injunctive relief against InnoVida, Osorio and Toll to enjoin them from future violations of the federal securities laws. The complaint also seeks an order barring Osorio and Toll from serving as an officer or director of a public company.
The SEC's investigation was conducted in the Miami Regional Office by Senior Investigations Counsel Gary M. Miller and Accountant Karaz S. Zaki under the supervision of Assistant Regional Director Elisha L. Frank. Amie Riggle Berlin will lead the SEC's litigation. The SEC acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of Florida, and the Federal Bureau of Investigation, Miami Division in investigating this matter.
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