UNITED STATES SECURITIES AND EXCHANGE COMMISSION

The SEC alleges that from at least March 2017 through June 2021, Defendants Ofer Abarbanel, Victor Chilelli. and New York Alaska ETF Management LLC (“NY Alaska”) engaged in a fraudulent scheme to deceive and defraud investors in two mutual funds: the State Funds – Enhanced Ultra-Short Duration Mutual Fund (“State Funds”), registered in the United States; and the Income Collecting 1-3 Months T-Bills Mutual Fund (“Income Collecting Fund”), registered in the Cayman Islands (collectively, the “Funds”). Abarbanel, with the assistance of NY Alaska and Chilelli, used the Funds to deplete, dissipate, and misappropriate investor assets through a fraudulent course of conduct that included the creation of nominee shell companies, the diversion of funds to these shell companies in unauthorized, uncollateralized loan transactions that violated the terms set forth in the Funds’ public filings, prospectuses, and other documents issued to investors, and the submission of false and misleading statements of material facts to investors. The Defendants made false and misleading statements about the Funds, used the Funds to enter into unauthorized, uncollateralized loan transactions with counterparty shell companies that Defendants controlled, and then used misappropriated investor funds to engage in unauthorized, often high-risk, trading activities to benefit themselves, but not the Funds or their investors. Despite telling investors that State Funds was going to invest, and had invested, in reverse repurchase agreements (“Reverse Repos”) with independent financial institutions, Abarbanel and NY Alaska instead caused State Funds to enter into unauthorized, uncollateralized loan transactions with counterparty shell companies that Abarbanel and Chilelli created and controlled. In February 2019, Abarbanel closed down State Funds and transferred operations to the Income Collecting Fund after certain investors became suspicious and began to make inquiries into State Funds and its investment activities. Abarbanel, Chilelli, and the Income Collecting Fund continued to perpetrate their fraudulent course of conduct through the Income Collecting Fund. The Income Collecting Fund was not registered with the SEC and did not issue public filings with the SEC, and thus provided no comparable disclosure about its operations to United States regulators. Between approximately March 2019 and June 2021, Abarbanel and the Income Collecting Fund entered into similar unauthorized, uncollateralized loan transactions with nominee shell companies that Abarbanel and Chilelli controlled, while misrepresenting to investors that the transactions were collateralized Reverse Repos entered into with independent third parties. In February 2021, the United States Attorney’s Office for the Southern District of New York approached Chilelli and another individual associated with State Funds and the Income Collecting Fund, revealing a criminal investigation into the Funds. Confronted by multiple investigations, Abarbanel again forced investors to redeem, ultimately paying back all investors in the Income Collecting Fund, with the exception of its largest group of investors, Investor Group A. Investor Group A had approximately $106 million in assets invested with the Income Collecting Fund. Investor Group A demanded a full redemption of its outstanding investment. Due to Defendants’ misappropriation, dissipation, and depletion of investor deposits, however, Abarbanel and the Income Collecting Fund were without sufficient funds to redeem Investor Group A. As a result of the conduct described herein, Chilelli violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and aided and abetted violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Judgment Rendered

Disgorgement

$4,757,750.00

Monetary Penalty other than Fines

Injunction