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The Securities and Exchange Commission on Tuesday charged a hedge fund investment advisory firm and its two founders with running a “multi-faceted” scheme to defraud clients of up to $1.8 million and failure to comply with fiduciary obligations.

The federal commission alleged that Eugenio Verzili, 44, of Miami Beach and Arturo Rodriguez, 47, of Costa Rica, through their New York-based firm Juno Mother Earth Asset Management LLC, misappropriated client assets, inflated assets under management, and filed false information such as bogus academic credentials with the SEC.

The SEC is seeking permanent injunctions, return of ill-gotten gains plus prejudgment interest, and monetary penalties.

“Juno, Verzili and Rodriguez looted approximately $1.8 million of assets from a hedge fund they manage, misusing it to pay Juno’s operating costs related to payroll, rent, travel, meals, and entertainment,” an SEC statement said. “They issued promissory notes to conceal a substantial portion of their misappropriation.”

According to the SEC’s 23-page complaint filed in U.S. District Court for the Southern District of New York, Juno sold securities in client brokerage and commodity accounts and directed 41 separate transfers of cash to Juno’s bank account, claiming falsely that the transfers were reimbursements for expenses Juno had incurred on behalf of the client fund.

Verzili and Rodriguez later fabricated and issued nine promissory notes to make it appear that the client fund had invested the money in Juno. But they concealed the so-called investment from the independent directors of the client fund.

Wayne Tompkins can be reached at (305) 347-6645.

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