SEC Claims That "Fancy Colored Diamond" Investment And Cryptocurrency Was $30 Million Ponzi Scheme

The Securities and Exchange Commission filed an emergency enforcement action against several Florida residents alleging that an investment opportunity involving “fancy colored diamonds” and diamond-related cryptocurrency was a Ponzi scheme that raised at least $30 million from hundreds of victims. Jose Aman, Harold Seigel, and Jonathan Siegel, along with their related companies, were charged with violations of federal securities laws in a complaint filed in the Southern District of Florida. In addition to seeking the standard remedies, the SEC obtained the appointment of a receiver over the operation’s assets and is seeking the return of nearly $2 million paid to a church and pastor associated with the defendants.

According to the complaint, the men owned and/or operated Natural Diamonds Investment Co. (“Natural Diamonds”), Eagle Financial Diamond Group Inc. (“Eagle”), and Argyle Coin, LLC (“Argyle”) (collectively, the “Companies”). Beginning no later than May 2014, the Defendants allegedly raised at least $30 million from investors through several offerings. In offerings through Natural Diamonds and Eagle, potential investors were told that their funds would be used to purchase, refurbish, and resell high grade diamonds. Investors were promised varying amounts of return depending on the offering, with the Natural Diamonds offering promising 2% monthly interest for 24 months and the Eagle offering promising to double an investor’s money within 18 or 24 months.

Some investors were solicited through Harold Seigel’s radio show and podcast titled “The World Financial Report” in which the offerings were touted as opportunities to earn 24% annual returns. The SEC claims that these solicitations often includes assurances that the investment was safe, secure, and backed by “diamonds worth 10 times [the investment amount].” It appears that the vast majority of funds, approximately $25 million, was raised through the Eagle offering from March 2015 through December 2018. The Complaint also alleges that funds raised in the various offerings were routinely commingled to rectify account overdrafts or make purported interest payments to investors.

Beginning in December 2017, the Defendants allegedly began soliciting investments in a supposed cryptocurrency token called the “RGL Coin” that was purportedly backed by “fancy colored diamonds” and 100% guaranteed by an “insurance bond.” Potential investors were told that they were investing in the “Argyle Coin Project” and that their funds would be used to buy and sell diamonds and to build a virtual platform where diamonds could be bought and sold online. On its now-disabled website, Argyle made the following claims:

Argyle Coin is the first cryptocurrency to offer the public an opportunity to be directly buying and investing in the growing fancy colored diamond market
Why Is It Unique?

The Company is creating a new platform to buy and sell fancy colored diamonds. Through a secure, effective and fast system. It is an end-to-end solution with its own Token and systems of verification, trading and tracking of diamonds.

RGL as the trading symbol. It serves as a reference for the use of this system and in the market of precious gems
Why Argyle Coin?

Mitigating Risk Factors:

Third-party insurance bond that guarantees 100% of Pre-Sale and Crowdfunding purchases made, guaranteeing that every token will be delivered.

Argyle also promoted the investment through the below video:

Through an initial coin offering, Argyle raised at least $1.7 million from investors including a $500,000 investment from an unnamed “professional football player” residing in Wellington, Florida.

The SEC alleges that Argyle’s purportedly lucrative diamond-reselling operation was actually a Ponzi scheme that used money from new investors to pay purported returns to existing investors. Of the approximately $30 million raised from investors, the Defendants allegedly misappropriated at least $10 million to pay fictitious returns and also for Aman’s personal expenses that included house payments, shopping at Gucci, and buying horses and riding lessons for his son. In addition, the SEC claims that Aman’s church and pastors received more than $1.5 million in improper payments tied to the scheme. While Argyle Coin did have an insurance bond, its coverage only applied if Argyle Coin developed a cryptocurrency which the SEC claims did not happen.

A copy of the SEC’s Complaint is below: