Rimar Capital Settles with SEC Over Misleading AI Claims in $3.73M Investor Fraud

Rimar Capital LLC and its associated entities have reached a settlement with the U.S. Securities and Exchange Commission (SEC) over charges of defrauding investors through deceptive claims about artificial intelligence (AI) technology.

The SEC accused Rimar Capital’s CEO Itai Liptz and board member Clifford Boro of using AI-related buzzwords to falsely promote the firm’s alleged AI-powered trading platform for cryptocurrencies, equities, and futures. According to the SEC’s statement on October 10, the two misled investors and raised nearly $4 million.

No Trading Platform Existed

The SEC revealed that Rimar Capital’s touted AI-driven trading system was non-existent during the fundraising campaign. Despite presenting detailed pitch decks, online posts, and email communications to potential investors, Liptz and Boro had no functioning trading platform.

Investors were led to believe they were investing in cutting-edge AI technology, but the reality was far from the claims made. The SEC further alleged that the firm’s assets under management were exaggerated. While Liptz and Boro told investors that Rimar held between $16 million and $20 million, the firm actually had less than $2 million.

Penalties and Industry Ban on Rimar

Beyond the false AI claims, the SEC’s investigation uncovered that Liptz had misappropriated company funds for personal use, even though the money was supposed to be used for marketing and product development. In one pitch, Liptz promised the creation of a “Hedge Fund for everyone” app. However, such promises were never realized.

Rimar Capital, Liptz, and Boro agreed to settle the charges without admitting or denying wrongdoing. Together, they paid a civil penalty of $310,000. Additionally, Liptz consented to disgorge $213,600 in funds and prejudgment interest, while also accepting a five-year industry bar.

Andrew Dean, co-chief of the SEC’s Asset Management Unit, noted the agency’s commitment to rooting out misleading claims in the rapidly evolving AI space. “As AI becomes more popular in the investing space, we will continue to be vigilant and pursue those who lie about their firms’ technological capabilities and engage in ‘AI washing,’” Dean stated.