Thursday, February 2, 2023

How George Santos pitched an alleged Ponzi scheme to investors

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George Santos graciously welcomed his three guests to Il Bacco Ristorante in Queens. Restaurant staff took their coats at the door and escorted them to a private dining room upstairs. Santos had with him business cards from Harbor City Capital, the Florida-based investment firm where he worked.

He was ready to make his pitch.

With him that night in November 2020 was Christian Lopez, who two years prior was badly injured when a drunk driver smashed into his parked car near where he lived in Queens. His injuries required four surgeries. Lopez had been awarded $2 million in insurance money two months earlier — a fact that Lopez’s attorney said she had shared with Santos, a longtime acquaintance.

“I felt like we were in ‘Goodfellas,’ like we were in a mafia movie,” Lopez, 35, told The Washington Post. “They were like, ‘Hello, I see you are here with George, right this way.’ Bringing us to this fancy restaurant and doing all this, I felt like he was doing it to capture us.”

Over wine and caprese salad, Santos laid out a can’t-miss investment opportunity for Lopez to invest in bonds financing digital advertising. “He was saying if you give me $300,000, I am going to make you money. I’m going to make you $3 million,” said Lopez.

Lopez was among several people who in recent days described to The Post how Santos attempted to persuade them to invest with Harbor City. Santos worked as the company’s New York regional director for more than a year before the Securities and Exchange Commission filed suit in April 2021, alleging that the firm defrauded investors of millions of dollars in a “classic Ponzi scheme.”

Santos, the 34-year-old freshman Republican congressman from New York who lied brazenly about key aspects of his biography, has said he was unaware of any fraud by Harbor City.

Collectively, the accounts gathered by The Post offer a detailed picture of Santos’s efforts to recruit investors for Harbor City. In two instances, he inflated his own academic or professional credentials, The Post found. In addition, Zoom recordings of workplace meetings show Santos offering anecdotes about his purported interactions with wealthy people — stories disputed by those involved — for potential inclusion in marketing materials or to impress prospective clients.

Two of the people he pitched said they did not realize until being contacted by a reporter that the man they’d known as “George Devolder” was the newly elected congressman who among other things falsely claimed that his mother was working in the World Trade Center on Sept. 11, 2001. “Devolder” was Santos’s mother’s surname.

“I can’t believe it,” one of the two, Al Conard, said when told that Devolder and Santos are one and the same. Conard, a 60-year-old real estate agent from Minnesota, said he lost $50,000 in Harbor City.

Santos’s lawyer, Joseph W. Murray, declined to comment for this story. After the SEC sued Harbor City, Santos told the Daily Beast, “I’m as distraught and disturbed as everyone else is.” Since the election, he has apologized for what he called “résumé embellishment” but rejected calls for his resignation.

On Jan. 11, Rep. George Santos (R-N.Y.) told reporters he will not resign, despite calls for him to do so. (Video: ABC)

Harbor City called George Santos a ‘perfect fit.’ The SEC called the company a fraud.

In internal Harbor City meetings, Santos refined his pitch, breezily offering stories he said he could tell investors to demonstrate his credentials or lighten the mood, according to the Zoom recordings obtained by The Post. Some of the tales were self-deprecating, but they delivered the same message: that he operated in the orbit of the rich and powerful.

During a meeting in early 2020, Santos claimed that he once accidentally flipped over a table while in the office of Stephen A. Schwarzman, the billionaire private equity investor and Blackstone CEO. “I actually sat on a chair inside of Blackstone’s office on the day of the signing of a deal … and I flipped backwards, flipping the table on the chief executive … I flipped the table on Schwarzman.”

“I walked out of there feeling like a completely incompetent idiot,” he added, according to Zoom footage of the meeting.

A Blackstone spokesman said Schwarzman “has no recollection of any such incident or meeting Mr. Santos, and we have found no record of Mr. Santos having a business relationship with Blackstone.”

Another anecdote Santos volunteered involved what he claimed was a long-running personal relationship with the chief executive of one of the largest pension funds in the nation — the California Public Employees’ Retirement System, or CalPERS — to secure a multimillion-dollar investment in Harbor City.

“It’s very ambitious,” he said on one of the recordings. “But I happen to have a personal relationship with Marcie Frost, the CEO of CalPERS, and we have a lot of good rapport for the past four years. … I’ve been involved in six of their deals, and it’s been just, you know, an official relationship.”

CalPERS denied those claims. No one named George Santos or George Devolder “has any relationship with the pension fund’s CEO,” it said in a statement to The Post. “And we have been unable to locate any records of any relationship, business or otherwise, with this individual.”

In discussions of how to pitch investors, Santos described some of his strategies.

“I don’t target low-level pawns in corporations because I think it takes too long to work up the ladder. So I’d rather waste time looking for the right people rather than wasting time with the wrong people,” he said on one of the recordings.

“I’m targeting people I know. I’m targeting people who know who I am,” he said on another.

Santos, whose mother was a Brazilian immigrant, described how he could relate to different types of prospective investors. “I’ve walked into the room where I was the only non-White guy and suffered racism,” he said, adding, “Everybody looked at me weird like, ‘Who’s Julio?’”

Tiffany Bogosian, the attorney who represented Lopez in his personal injury case, said in an interview that she grew up with Santos and attended the same junior high school.

Bogosian said she had known Santos to mischaracterize facts about his life, such as by telling people he went to a high school he did not attend. She viewed those transgressions as an outgrowth of his having grown up without much money, having had to learn English along the way and having been picked on a lot at school.

She said Santos proposed the dinner. She agreed — and attended.

But the way Santos was welcomed by the restaurant staff, and the way he ordered dish after dish, made her worry that he was trying to fleece her client, she said.

“I was so pissed,” she said. “He did this nice show and dance. Everyone at the restaurant knew it. It felt like this was a routine he did. Like this was not the first time.”

The dinner with Lopez took place just eight days after Santos lost his first bid for Congress. Santos has reported spending tens of thousands of dollars at Il Bacco for political reasons. According to campaign finance reports from his 2020 and 2022 bids, his campaigns and a political action committee run by his sister spent $30,363.33 at the restaurant.

Dozens of the expenditures listed in the reports, including seven his campaign made at Il Bacco in the 2022 cycle, are in increments of $199.99, the maximum amount committees can spend without keeping a receipt, invoice or canceled check. He also owes the restaurant, which is frequented by other local Republican politicos, $18,773.54 after holding an election night event there, according to the reports.

Messages seeking comment from the management of Il Bacco were not returned.

As they dined on ravioli, shrimp and pasta, Lopez and Bogosian said, Santos told them he had experience working at Goldman Sachs, which the bank denies. Bogosian said Santos claimed to have a master’s degree and a license to sell securities, neither of which could be confirmed. (Santos has also said he attended Baruch College on a volleyball scholarship, though the college has disputed this, and after the 2022 election Santos acknowledged he did not graduate from any college.)

He outlined how the investments would pay out thousands of dollars per week, risk-free, according to Bogosian, Lopez and Lopez’s girlfriend, Jenny Ruiz, who also attended. “He was telling us the money would go toward this marketing campaign and he would use the money to flip it and return the money to you,” said Ruiz. “He said it would be a good way to save your money. Instead of spending it all you will get it in bits per week.”

But Lopez, who works as an Airbnb host, and Bogosian said they grew suspicious that Santos and the staff were performing a well-practiced sales pitch. “I was so weirded out because no one has ever treated us that good that didn’t know us,” Lopez said.

After the dinner, Santos and other Harbor City staff repeatedly emailed Lopez asking when he would invest, Lopez said. “I look forward to helping you achieve your financial freedoms and stability in the long term,” Santos wrote in a follow-up email viewed by The Post. “Please let me know if you have questions for me and I will be glad to answer them all.”

Santos attached a 62-page document titled “CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM” offering investments in three different Harbor City Capital bond offerings with advertised returns of 10, 12 and 14 percent. The document lists the names and biographies of the firm’s top executives.

Lopez was not persuaded. “Every other day there was a message from him or from his peoples, and I was like, ‘My man, who goes this hard? If you are making large amounts of money, you are not going to hit me up every day.’”

When Lopez decided against investing, Santos flew into a rage at Bogosian, she said. “George got so mad. He was like, ‘You wasted my time, this was company time, money on my company card,’” she said.

Still, she stayed in touch with him. After he was elected, as his lies were exposed, she sent him notes of encouragement, according to messages she showed The Post.

“Omg are u ok babe I felt so bad seeing u at congress,” she wrote him in early January.

“They (the media) doesn’t like when the poor people infiltrate their ranks,” he wrote to her later.

On another occasion, Santos pitched Peter Blaney, a Canadian biotech investor. In an interview with The Post, Blaney said he’d known “George Devolder” for years, having met him at a New York conference held by Linkbridge, a networking group for investors where Santos then worked. The man Blaney knew as Devolder claimed to have attended New York University and to have turned down an offer to attend Harvard University’s business school.

Blaney said he wasn’t interested. “It sounded like a perpetual marketing scheme to me. It was going to make money on government bonds,” Blaney said.

Nonetheless, Blaney said, he believed Santos was trustworthy. They stayed in touch.

After the SEC filed its lawsuit, Blaney said, Santos called him, nearly in tears at having lost “$1 million of his own money.” The SEC documents do not indicate whether Santos invested any of his own money in Harbor City. The SEC case was stayed last year after the judge was told that the same matters were the subject of a criminal investigation.

“I think George is an honest and upright guy,” Blaney told The Post. “George had no idea there was anything wrong with it. I can tell you George is a victim. … He wouldn’t approach his friends for something where they were going to lose. He’s not that kind of a guy.”

After being told that Devolder is Santos, Blaney went silent for a few moments.

“Honestly, I didn’t know it was the same guy,” he said.

“I don’t know what to say,” he said. “If you ask me if I have any really hard evidence that he is on the up and up, I don’t have any. I’m not stupid. I’m pretty street-smart. Honestly, I have no idea what to say.”

Conard, the Saint Paul real estate agent, said he was pitched by Santos and J.P. Maroney, Harbor City’s founder and chief executive. After realizing he would not be getting back the $50,000 he said he lost, Conard contacted Maroney via LinkedIn in April of 2022 seeking an explanation, according to an exchange of messages viewed by The Post.

“My life savings gone in a day!” Conard wrote. “Really with all the money gone you must have a nice nest egg of my and others cash sent to you! Just thought it would be nice to see someone really having a conscience and take responsibility for what they did and caused so much pain to people.”

Maroney, 52, did not respond to a request for comment from The Post. In court, he has denied the SEC allegations, which were brought in federal court in Orlando. Harbor City itself has not responded in court.

In a response to Conard, Maroney wrote that since the SEC investigation he had lost his home, all but one vehicle and “any remaining assets of any value.”

“It is a terrible situation that has impacted you and others as well as our family,” he wrote. “I’m not asking for sympathy. I’m just sharing where we are now. I must live with, and ultimately face any consequences for decisions I’ve made along the way.”

“We had good intentions from the beginning, and were never out to ‘scam’ anyone. I wish you the very best, and as I said I remain committed to making you and others whole. Please accept my sincere apologies for the impact this has had on your life.”

Monika Mathur contributed to this report.



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