FRAUDSTER'S $100 MILLION SCAM NETS JAIL TIME, ESCAPES SEC FINE!

SEC v. Ofer Abarbanel — U.S. Securities and Exchange Commission Litigation Release No. 26494, dated February 27, 2026.

The SEC charged Ofer Abarbanel with orchestrating a $100 million fraud by diverting mutual fund assets to shell companies he controlled. Abarbanel pleaded guilty in a parallel criminal case, was sentenced to four years in prison, and ordered to pay over $106 million in forfeiture and restitution. The SEC obtained a final consent judgment against him, permanently enjoining him from future securities law violations.

In Plain English

Imagine someone was in charge of two piggy banks for people's savings. Instead of keeping the money safe, they secretly moved a lot of it into fake companies they owned. This was like stealing from the piggy banks. Later, the government found out and made them pay back the money and also put them in jail for a while.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. Misappropriating Fund Assets Ofer Abarbanel, as manager of the Income Collecting 1-3 Months T-Bills Mutual Fund and the State Funds – Enhanced Ultra-Short Duration Mutual Fund, allegedly diverted fund assets. He used unauthorized, uncollateralized loan transactions to move money out of the funds.
2. Directing Funds to Shell Companies The diverted fund assets were channeled into shell companies that were under Abarbanel's control. This action directly violated the terms outlined in the funds' public filings, prospectuses, and other investor documents.
3. Violating Fund Documents Abarbanel's actions, specifically the unauthorized and uncollateralized loan transactions, were in direct contravention of the investment strategies and safeguards disclosed to investors in the funds' official documentation.
4. Defrauding Investors Through this scheme, Abarbanel allegedly defrauded investors in the two mutual funds. The SEC's amended complaint detailed this scheme to defraud investors, which involved approximately $100 million.
5. Criminal Conviction In parallel proceedings, the U.S. Attorney’s Office for the Southern District of New York charged Abarbanel with defrauding investors. He subsequently pleaded guilty in September 2022.
6. Sentencing and Restitution Following his guilty plea, Abarbanel was sentenced to four years in prison. He was also ordered to forfeit and pay restitution to victims totaling $106 million.
7. SEC Consent Judgment On February 25, 2026, the U.S. District Court for the Southern District of New York entered a final consent judgment against Abarbanel. This judgment permanently enjoins him from violating federal securities laws.
8. Monetary Relief Ordered The consent judgment ordered disgorgement of $106,530,000 plus prejudgment interest of $3,639,277. This amount was offset by $88,785,385 already returned to investors through an asset freeze.
9. Criminal Forfeiture Satisfaction The remaining amount owed under the consent judgment was deemed satisfied by the criminal forfeiture and restitution orders entered against Abarbanel in the parallel criminal case, United States v. Abarbanel.
10. No Civil Penalty Imposed In light of his conviction and sentence in the criminal action, the final judgment imposed no separate civil money penalty against Abarbanel.

The Enforcement Action

SEC Obtains Final Consent Judgment as to Alleged Orchestrator of $100 Million Fraudulent Scheme Involving Two Mutual Funds. On February 25, 2026, the U.S. District Court for the Southern District of New York entered a final consent judgment as to Ofer Abarbanel, the manager of two mutual funds. The SEC previously charged Abarbanel and others with an alleged scheme to defraud investors in these two mutual funds by diverting fund assets to shell companies under his control using unauthorized, uncollateralized loan transactions. Abarbanel pled guilty in a parallel criminal case in September 2022 and was sentenced to four years in prison and ordered to forfeit and pay restitution to victims in the amount of $106 million. The final consent judgment permanently enjoins Abarbanel from future violations of antifraud provisions of the federal securities laws. The judgment orders disgorgement of $106,530,000 plus prejudgment interest of $3,639,277, offset by $88,785,385 collected through the asset freeze and returned to investors, with the remaining amount deemed satisfied by the criminal forfeiture and restitution orders. No civil money penalty was imposed. The SEC also instituted a settled follow-on administrative proceeding barring Abarbanel from association with regulated entities.

Named in this action: Ofer Abarbanel.

Original SEC litigation release ↗ · Browse all cases