On November
18, 2013, a U.S. District Court in Massachusetts found that Steven Palladino
and his investment advisory firm, Viking Financial Group, perpetrated a
fraudulent scheme that raised millions of dollars that were supposed tobe used
to make short-term, high interest loans to those unable to obtain traditional
financing.
Ruling in
an emergency enforcement action brought by the Securities and Exchange
Commission, the court determined that Palladino and Viking lied to at least 33
customers regarding how their investment funds would be used. Specifically, the defendants misrepresented
to the investors that the loans to be made by Viking would be secured by
first-position liens on real estate, and that investors would receive monthly interest
payments between 7% and 15%. Contrary to
these misrepresentations, Viking made very few actual loans to borrowers. Instead, Palladino misappropriated the money
for his own use, spending the money on vacations, gambling, and luxury items.
Ruling on the
SEC’s petition, the court found that the defendants violated several provisions
of the federal securities laws, and ordered them to pay nearly $10 million in
disgorgement of ill-gotten gains.
Criminal charges against Palladino and Viking remain pending.
