The CEO of a La Jolla-based financial firm was arrested last week in connection with federal fraud charges for a multi-million dollar loan scheme.
The chief executive of Ethos Asset Management, Carlos Manuel da Silva Santos of Portugal, was taken into custody in New Jersey on Nov. 12. The United States has charged him with wire fraud conspiracy related to a loan scam.
Santos, 29, is accused of orchestrating a fraud scheme through his company Ethos Asset Management, which offers financing to international businesses.
The complaint says that Santos required prospective borrowers to pay an upfront fee equivalent to a percentage of the loan amount. But, once those upfront payments were made, the complaint said Ethos did not distribute the funds to borrowers.
According to the complaint, Santos used the upfront fees to repay other prospective borrowers, pay commissions to his co-conspirators and pay for his own personal expenses.
The complaint outlines instances where Santos allegedly used false bank statements to inflate the assets of his business to close deals or open a line of credit. In one instance in 2021, the lawsuit shows a fabricated bank statement that said Ethos had just over $100 million deposited in the bank account. This statement was shown to a prospective client seeking $4 million in funding in exchange for a $1 million upfront fee to Ethos.
However, federal investigators obtained official bank records for the Ethos account, which actually had less than $1 million deposited at the time. The prospective client paid the $1 million upfront fee, but never received the loan funds as promised, according to the complaint.
Earlier this year, Santos allegedly duped another victim into paying more than $8 million in upfront fees by representing that Ethos had almost $360 million in a specific brokerage account. However, records show that account did not exist and the other account associated with the firm never had a balance of more than $200,000.
Santos allegedly falsified Ethos’ balance sheets and real financial account statements to obtain a $14.8 million line of credit from a bank. The company’s bank account statement said it had almost $105 million deposited, but investigators obtained the bank statement that had a balance of just over $1 million.
The maximum penalty for wire fraud conspiracy is 20 years in prison and a $250,000 fine.
