Is George Santos in trouble again? Congressman allegedly raised money for company believed to be a Ponzi scheme: report

Rep. George Santos (R-NY), who was embroiled in a controversy over investigations into his campaign finances and blatantly lied on his resume, may have courted further controversy.

What happened: Santos persuaded a wealthy individual to commit to a six-figure investment in Florida-based Harbor City Capital, which was placed in receivership by the SEC a year later for this reason being a Ponzi scheme, reported the Wall Street Journal. The representative reportedly convinced the investor by saying that he personally raised approximately $100 million for the company and also invested his own family's money in the company.

Receivership is a debt restructuring process whereby a receiver is appointed to collect and sell the assets of a company to settle the financial claims of secured creditors. Harbor City catcher Katherine Donlon reportedly said Santos was paid for the work he did for the company. Santos' resume indicates that he worked for Harbor Capital in 2020.

People who raise funds on behalf of clients in exchange for a commission must be brokers and should work for a licensed brokerage firm, the Journal said. The SEC, according to the report, has already punished those who do the work of a broker without acquiring licenses.

In the case of Santos, it is not registered as a broker with the Financial Industry Regulatory Authority, according to the report. He also noted that small businesses or investment managers sometimes employ finders to raise funds and they are paid to recruit investors.

Santos, in its financial disclosure forms intended for filing by vying federal candidates, did not include any income from Harbor City.

While Harbor City said in a 2020 statement that Santos would serve as regional manager of its New York office, his job was to recruit investors for the company's financial offering. company, according to the report. The company offered what it called covered bonds, guaranteeing investors returns of up to 20% as well as safety of principal, she added.

See also: Joe Rogan says Donald Trump's presidency gave 'morons' a king: 'He represents them'

Where does that leave McCarthy: Calls for Santos to step down grow louder every day, not just Democrats, but members of his own party in New York have called for his resignation, according to Axios.< /p>

Santos, however, stood his ground and refused to step down, believing he was elected to serve the people and not the party or politicians.

Amid this furor, newly elected Speaker of the House Kevin McCarthy (R-CA) threw his weight behind Santos. The speaker reportedly suggested that he would not join the chorus demanding Santos' resignation and that the congressman would still receive committee assignments. Incidentally, Santos' vote mattered to McCarthy because Republicans only had a slim majority in the House. McCarthy was only able to claim victory on the 15th ballot, and the final vote tally of 216-212 suggests five of his own party members withheld their votes.

Read now: Biden's former VP aides say they were rushed to pack: 'It was a time really really weird"

© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.