Rep. George Santos (R-NY), who has been embroiled in controversy over investigations into his campaign finances and blatantly lying on his resume, may have courted a new controversy.
What Happened: Santos persuaded a wealthy person to commit to a six-figure investment in Florida-based Harbor City Capital, which was placed in receivership by the SEC a year later on the grounds of it being a Ponzi scheme, the Wall Street Journal reported. The representative reportedly convinced the investor by saying he personally raised about $100 million for the company and had also invested his own family’s money in the company.
Receivership is a debt restructuring process under which a receiver is appointed to collect and sell a company’s assets for settling financial claims of secured creditors. Harbor City’s receiver Katherine Donlon reportedly said Santos was paid for the work he did for the company. Santos’ resume indicates he worked for Harbor Capital in 2020.
People who raise money on behalf of clients in return for a commission need to be brokers and should be working for a licensed brokerage, the Journal said. The SEC, according to the report, has previously punished those who do the work of a broker without acquiring licenses.
In Santos’ case, he isn’t registered as a broker with the Financial Industry Regulatory Authority, the report said. It also noted that small businesses or investment managers sometimes employ finders for raising money and they are paid for recruiting investors.
Santos, in his financial-disclosure forms meant to be filed by federal candidates running for office, did not include any income from Harbor City.
While Harbor City said in a 2020 release that Santos would serve as regional director of its New York City office, his job was to rope in investors for the company’s financial offering, the report said. The company was offering what it called secured bonds, assuring investors yields as high as 20% along with the security of principal, it added.
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Where Does This Leave McCarthy: The calls for Santos to resign are growing louder each day, not only Democrats, but his own party members from New York have sought his resignation, according to Axios.
Santos, however, has stood his ground and has refused to step down, reasoning that he was elected to serve the people and not the party or politicians.
I was elected to serve the people of #NY03 not the party & politicians, I remain committed to doing that and regret to hear that local officials refuse to work with my office to deliver results to keep our community safe and lower the cost of living.— George Santos (@Santos4Congress) January 11, 2023
I will NOT resign!
Amid this furor, newly-elected House Speaker Kevin McCarthy (R-CA) has thrown his weight behind Santos. The speaker reportedly suggested he will not join the chorus demanding Santos resign, and that the congressman will still receive committee assignments. Incidentally, Santos’ vote mattered for McCarthy as the Republicans had only a narrow majority in the House. McCarthy was able to secure victory only on the 15th ballot, and the final vote tally of 216-212 suggests five of his own party members withheld their votes.
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