Case Summary: SEC v. Inofin, Cuomo, Mann, George, Keough, Affeldt, 11-cv-10633, (D. Mass.)
This is a case about the sale of subprime automobile loans to unwary investors.
The SEC alleges that the defendants illegally raised $110 million from hundreds of investors residing in 25 states through the sale of securities by making material misrepresentations about Inofin's financial performance, its business activities, and the use of investor funds in violation of anti-fraud and registration provisions of the federal securities laws.
Inofin holds itself out to the investing public as a motor vehicle sales finance company specializing in the purchase of subprime auto loans. Inofin and its principal officers, Cuomo, Mann, and George, allegedly misrepresented to investors that the company used investor money for the sole purpose of funding subprime auto loans. Unbeknownst to the investors, though, Inofin allegedly lent a third of its capital to businesses established and controlled by Cuomo and Mann to start used car dealerships and other property developments and at rates substantially lower than the subprime auto loan rates.
Inofin and its principals also allegedly knowingly, reckless, and materially misrepresented Inofin's financial performance to its investors stating that Inofin was a profitable business and a sound investment.
Finally, the SEC alleges that Inofin's capital raising activities were supported by commission-based sales agents that included Affeldt and Keough (payments were made to Keough’s wife) who collectively received several hundred thousand dollars in commissions.
The video is of argument on a Motion for Summary Judgment filed by the Keoughs. They allege that, based on undisputed facts, they had nothing to do with the sale of the securities. The SEC claims that the Keoughs’ brokerage clients and Inofin employees have provided declarations attesting to the exact opposite. The Motion is denied by the judge at the end of the hearing.
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