Miami payday lender ordered to pay $39 million to Venezuelan investors

Efrain Betancourt Jr., CEO of Sky Group USA, LLC is pictured with his wife, Leidy Badillo

Efrain Betancourt Jr., CEO of Sky Group USA, LLC is pictured with his wife, Leidy Badillo

A Miami payday loan company has been ordered by a federal judge to pay more than $39 million to hundreds of Venezuelan Americans in South Florida who lost some of their money after investing in the company.

Sky Group USA, LLC agreed to the Securities and Exchange Commission’s final ruling without admitting or denying violations of federal law.

According to court filings, Sky Group has until the end of July to pay that amount to resolve the SEC’s civil suit. Under similar settlement terms, Efrain Betancourt Jr., the CEO of Sky Group, has agreed to pay more than $6 million in the total fine.

The Securities and Exchange Commission, whose regional offices are in downtown Miami, plans to reimburse more than 500 Sky Group investors for whatever the company and Betancourt ultimately pay for their losses. Sky Group and Betancourt are not expected to repay the full amount owed to the Securities and Exchange Commission pursuant to US District Judge Beth Bloom’s ruling.

Under the agreements with the SEC, Sky Group and Betancourt, 34, are prohibited from trading in securities in the United States. Her attorney, Mark Hunter, declined to comment Monday.

In September last year the SEC in Miami filed a civil complaint against Betancourt and his company, accusing them of committing securities violations in a scheme that authorities described as “affinity fraud.” In a civil enforcement action, the SEC said Betancourt and Sky Group sold investors a total of $66 million in fraudulent promissory notes. In fact, Betancourt raised millions from them to fund high-interest loans made to borrowers across the country.

According to the SEC complaint, Betancourt spent most of his money on a luxe lifestyle — including a new waterfront condo in Miami and a wedding with his fourth wife in Monaco — while using at least $19 million in interest payments to some investors to to keep her bay.

In an effort to dismiss the SEC’s lawsuit, Betancourt’s attorney, Hunter, argued that promissory notes are not securities like stocks and bonds, but loans; Therefore, his client and Sky Group did not break the law by failing to repay the lenders.

Betancourt’s alleged plan, outlined in the SEC complaint, lasted from January 2016 until just before the coronavirus pandemic hit the country in March 2020. As scores of borrowers defaulted on their payday loans, his company, Sky Group, ran into serious cash flow problems and was unable to make interest payments on investors’ promissory notes.

In December, Betancourt gave affidavit in one of several related arbitrations in which he repeatedly invoked his Fifth Amendment right against self-incrimination while being questioned.

In a previous statement, Betancourt, who was born in Venezuela and grew up in the Miami area, admitted that he did not have law and computer engineering degrees in the United States. But he insisted his payday loan deal was legitimate, even though he charged interest rates much higher than Florida’s 18 percent annual cap. He also said the people who invested in his company were “lenders” involved in funding short-term, high-yield loans. He called them “business transactions.”

“I’ve made it very clear that they invest in a payday portfolio,” Betancourt told Diaz in a May 2021 filing. “Now the payday portfolio has risks.”

Promise of high returns

According to the SEC’s complaint, Sky Group and Betancourt falsely told investors that the company would use investors’ money solely to make payday loans and defray the costs of such loans, promising them annual returns of up to 120 percent on the notes .

“We continue to caution investors to beware of investments that promise returns that appear too good to be true,” Eric I. Bustillo, director of the SEC’s Miami regional office, said in a previous statement. The SEC said Sky Group’s operations were similar to a “Ponzi” scheme.

In reality, the complaint said, Betancourt misappropriated at least $2.9 million for personal use. His expenses include: an extravagant wedding at a castle on the French Riviera, vacations to Disney resorts and the Caribbean, and expenses associated with buying a luxury Miami condo at the Epic Residences on Biscayne Boulevard. He also used some of the money to get service on his personal Piper plane, SEC officials said.

Epic Residences has also sued Betancourt, alleging he owes more than $65,000 in condo and hotel appraisals, according to court filings.

Betancourt was also charged with wiring at least an additional $3.6 million to friends and family, including his ex-wife Angelica Betancourt, and to EEB Capital Group LLC for “no apparent legitimate business purpose,” according to the SEC complaint. That company’s bank accounts were controlled by Efrain Betancourt and his current wife, Leidy Badillo, the complaint said.

In a final judgment filed in late June, EEB Capital agreed to pay $2.2 million for the judgment against Sky Group and Efrain Betancourt.

For her part, Angelica Betancourt denied receiving $1.2 million from Sky Group, as alleged in the SEC complaint. She said she only earned an annual salary of $60,000 from the payday loan company, but she has yet to resolve her dispute with the securities agency.

This story was originally published Jul 11, 2022 4:51 p.m.

Jay Weaver writes about federal crime at the crossroads of South Florida and Latin America. Since joining the Miami Herald in 1999, he has reported non-stop in federal court, from Elian’s custody battle to A-Rod’s steroid abuse. He was part of the Herald team that won the 2001 Pulitzer Prize for breaking news of Elian’s seizure by federal agents. He and three Herald colleagues were 2019 Pulitzer Prize finalists for explanatory reporting for a series on gold smuggling between South America and Miami.