In an egregious fraud case, the SEC charged unregistered Reign Financial International, LLC and its principals for an alleged fraudulent investment scheme involving three purported high-yield investment programs (“HYIPs”) that raised over $26 million from at least 31 investors, enticing investors with promises of outsized short-term profits with little or no risk to their principal, claiming that investor funds would be used to source opaque financial instruments involving leverage through European banks. The complaint alleges that, in reality, the HYIPs did not exist, many investors lost their principal, and no investors received any profits. In addition, the complaint alleges the defendants misappropriated some of the investor funds and violated their fiduciary duties and the terms of the governing documents of the hedge fund they managed, which held HYIP investor proceeds, by misappropriated fund assets for their own personal use and benefit, including spending on jewelry, luxury cars, and private jet travel. One of defendants, Berone Capital, LLC was a state-registered investment adviser and hedge fund manager. Another defendant, Patrick Allen, was owner and principal of unregistered Compass Fuel & Oil entities, that administered two of the fraudulent HYIP programs. As noted in SEC investor alerts, HYIPs are often scams, and legitimate managers of high-yield bond funds and private credit funds should be mindful of the SEC's skepticism regarding potential fraud in these vehicles.