The chief executive officer of United States-based Ethos Asset Management, which said last year it would invest an undisclosed amount in CSC-Boustead Beef, was arrested last month on charges of wire fraud.
Carlos Manuel Da Silva Santos, a Portuguese national, was arrested in Newark, New Jersey as he arrived in the United States from abroad.
Santos (29) was the CEO of San Diego-based Ethos Asset Management, Inc. which offers financing to international businesses.
Ethos Asset Management announced in a statement on 1 November 2022 that it had entered into a long-term financing partnership with Boustead Beef Limited and had committed to providing significant capital infusion that would continue for several years.
The company, however, refused to disclose how much it planned to invest and how it had entered into a partnership with Boustead Beef when the CSC was under corporate rescue.
Santos was arrested on 12 November for alleged wire fraud conspiracy related to a loan scam.
According to a statement by the US Attorney’s Office, Southern District of California, Santos is accused of orchestrating the fraud by requiring prospective borrowers to provide an upfront fee in an amount equal to a certain percentage of the loan amount.
Upon receipt of the upfront fee, Santos and Ethos did not disburse the loan as agreed upon by the parties. Instead, Santos used the upfront fees to repay other prospective borrowers, issue commissions to his co-conspirators, and to pay for personal expenses.
“The complaint alleges that to lure prospective borrowers and to obtain lines of credit from financial institutions in furtherance of the scheme, Santos manipulated Ethos’ balance sheets and real financial account statements to artificially inflate Ethos’ net worth,” the statement says. “For example, the complaint alleges that Santos induced at least one victim to pay an upfront fee in excess of US$8 million by representing Ethos had US$359 088 190.22 in a specific brokerage account, but records established that Ethos had no such account.
“Similarly, the complaint contends Santos altered Ethos bank account statements to inflate bank account balances to prospective borrowers, sometimes by more than US$100 million than what was deposited in the account.”
The San Diego Union-Tribune says in one instance in 2021, the lawsuit shows a fabricated bank statement that said Ethos had just over US$100 million deposited in the bank account. This statement was shown to a prospective client seeking US$4 million in funding in exchange for a US$1 million upfront fee to Ethos.
“However, federal investigators obtained official bank records for the Ethos account, which actually had less than US$1 million deposited at the time. The prospective client paid the US$1 million upfront fee, but never received the loan funds as promised, according to the complaint,” the newspaper reported.
It said Santos allegedly duped another victim into paying more than US$8 million in upfront fees by representing that Ethos had almost US$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 US$200 000.
“Santos allegedly falsified Ethos’ balance sheets and real financial account statements to obtain a US$14.8 million line of credit from a bank. The company’s bank account statement said it had almost US$105 million deposited, but investigators obtained the bank statement that had a balance of just over US$1 million,” the paper said.
It is not clear whether Boustead Beef, which is fronted by Nick Havercroft, paid any upfront fee.
Boustead Beef entered into an agreement with the government to revive the CSC in 2019 but has failed to do so.
The government placed the CSC under corporate rescue at the end of 2020 but Boustead Beef has refused to budge though it is not carrying out any operations.