Embattled Rep. George Santos (R-NY) is facing questions about his ties to an investment firm accused of running a “classic Ponzi scheme.”
Santos, who flipped his district from blue to red in November, has largely kept a low profile since a report in the New York Times last month revealed that he had lied during the campaign about his family, religion, education, work experience, sexuality, and perhaps even an animal rescue charity he allegedly founded. On top of bipartisan condemnation for his string of lies, Santos also faces multiple investigations, including one into discrepancies on financial disclosure forms.
SANTOS DEFENDS RECORD, HINTS AT RUNNING AGAIN IN 2024: ‘I’VE LIVED AN HONEST LIFE’
It appears that Santos was honest in presenting one portion of his resume. The truth-challenged lawmaker served as a director at the investment firm Harbor City Capital from January 2020 to April 2021. The company, according to a Securities and Exchange Commission complaint from the same month Santos left, bilked millions of dollars from its customers in what the agency described as a “classic Ponzi scheme.”
The complaint alleged that Harbor City promised investors annual returns of 10% to 60% and told investors their funds would be used to finance “customer lead generation campaigns” and that reselling leads to other businesses would bring in cash. In reality, however, the money went toward company owner Jonathan Maroney’s personal expenses.
Santos was hired to raise capital for the firm and landed at least one significant investment from a wealthy investor, according to a Saturday report from the Wall Street Journal.
“When the investment failed to deliver on the promised returns, according to one of the people, Mr. Santos sought to reassure the investor by saying he had personally raised nearly $100 million and had invested his own family’s money in Harbor City,” the report said.
Santos was not named in the SEC complaint, though he maintains close ties with a number of people from the firm, which has since shut down. A court-appointed attorney reviewing the company’s assets told the Washington Post in an interview published Wednesday that Santos received payments from the firm at least a month after his April 2021 departure.
These payments were made weeks before Santos would register a business called the Devolder Organization, a company that he would claim in campaign financial disclosure forms as the basis for his wealth. The New York lawmaker has previously gone by George Devolder-Santos to include his mother’s maiden name.
Joseph Murray, a lawyer for the scandal-plagued congressman, told CNN on Thursday that Santos was unaware of wrongdoing at company, saying in a statement: “As to any questions about Harbor City Capital, in light of the ongoing investigation, and for the benefit of the victims, it would be inappropriate to respond other than to say that Congressman Santos was completely unaware of any illegal activity going on at Harbor City Capital.”
Asked about the matter for an April 2022 piece by the Daily Beast, prior to being exposed for lying about his background, Santos said he was “as distraught and disturbed as everyone else” to learn of the allegations against his former employer. Santos was questioned in that same interview about incorporating the Devolder Organization with the help of Harbor City’s ex-chief financial officer and going into business with others from the shuttered company, none of whom were singled out in the SEC complaint.
“That company too was all the people who were left adrift I tried to help,” Santos explained. “We all got together to start a business, but that was dissolved as well already.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
In addition to launching the Devolder Organization, he appears to be behind the creation of RedStone Strategy Group, a political group that the Federal Election Commission said was never registered with the agency. Santos and his lawyer declined to answer questions from the New York Times about RedStone’s fundraising efforts in past election cycles despite the firm listing the Devolder Organization as one of its managing officers in incorporation documents.
The outlet reviewed the limited campaign finance records associated with the group and found that RedStone was paid $6,000 in April 2022 by a PAC called Rise NY, which is run by Santos’s sister Tiffany. The report also claimed that Santos was directly involved in at least one donor solicitation for RedStone, which would be a violation of laws barring candidates or their campaigns from coordinating with such organizations.
