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UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 80198 / March 10, 2017

ADMINISTRATIVE PROCEEDING

File No. 3-17875

In the Matter of

VICTOR ALFAYA, 

Respondent.

ORDER INSTITUTING ADMINISTRATIVE 

PROCEEDINGS PURSUANT TO SECTION 

15(b) OF THE SECURITIES EXCHANGE 

ACT OF 1934 AND NOTICE OF HEARING 

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the 

public interest that public administrative proceedings be, and hereby are, instituted pursuant to 

Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Victor Alfaya 

(“Respondent” or “Alfaya”). 

II.

After an investigation, the Division of Enforcement alleges that: 

A. RESPONDENT

1. Between approximately June 2012 and January 2014, Alfaya defrauded 

investors in Lustros Inc. (“Lustros”), an issuer with common stock registered pursuant to Section 

12(g) of the Exchange Act that was subject to Exchange Act reporting obligations pursuant to 

Section 13(a). Among other things, Alfaya received transaction-based compensation in the form of 

undisclosed commissions to solicit investments in Lustros’s securities without being registered 

with the Commission as a broker or dealer. Alfaya participated in an offering of Lustros stock, 

which was a penny stock. Alfaya, 39 years old, is a resident of Port Washington, New York.
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B. ENTRY OF THE INJUNCTION/RESPONDENT’S CRIMINAL CONVICTION

2. On February 7, 2017, a final judgment was entered against Alfaya, 

permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 

(“Securities Act”) and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, in 

the civil action entitled Securities and Exchange Commission v. Jason Cope et al., Civil Action 

Number 1:14-cv-07575, in the United States District Court for the Southern District of New York.

3. The Commission’s Amended Complaint alleged that Respondent defrauded 

investors by, inter alia, accepting undisclosed commissions to solicit investors to buy Lustros 

securities. The Amended Complaint also alleged that Respondent solicited investors to purchase 

Lustros securities without being registered with the Commission as a broker or dealer. 

4. On April 28, 2016, Respondent pleaded guilty to one count of conspiracy to 

commit securities fraud, 18 U.S.C. § 1348, and wire fraud, 18 U.S.C. § 1343, in violation of 18 

U.S.C. § 1349 before the United States District Court for the Northern District of Ohio, in United 

States v. William Scholander et al., Crim. Indictment No. 1:15-cr-335. On January 25, 2017, 

Alfaya was sentenced to a prison term of 21 months followed by five years of supervised release 

and ordered to make restitution in the amount of $3,629,516.19.

5. The Indictment in the parallel criminal case alleged largely the same 

misconduct alleged by the Commission in the Amended Complaint. Among other things, the 

Indictment alleged that Alfaya defrauded investors and obtained money and property by means of 

materially false and misleading statements in connection with his solicitation of investors’ 

purchases of Lustros stock as described in Paragraph 3 above. 

III.

In view of the allegations made by the Division of Enforcement, the Commission deems it 

necessary and appropriate in the public interest that public administrative proceedings be instituted 

to determine:

A. Whether the allegations set forth in Section II hereof are true and, in connection 

therewith, to afford Respondent an opportunity to establish any defenses to such allegations; 

B. What, if any, remedial action is appropriate in the public interest against Respondent 

pursuant to Section 15(b) of the Exchange Act; and 

C. Whether, pursuant to Section 15(b) of the Exchange Act, it is appropriate and in 

the public interest to suspend or bar Respondent from participating in any offering of penny 

stock, including: acting as a promoter, finder, consultant, agent or other person who engages in 

activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny 

stock; or inducing or attempting to induce the purchase or sale of any penny stock.
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IV.

IT IS ORDERED that a public hearing for the purpose of taking evidence on the questions 

set forth in Section III hereof shall be convened at a time and place to be fixed, and before an 

Administrative Law Judge to be designated by further order as provided by Rule 110 of the 

Commission’s Rules of Practice, 17 C.F.R. § 201.110.

IT IS FURTHER ORDERED that Respondent shall file an Answer to the allegations 

contained in this Order within twenty (20) days after service of this Order, as provided by Rule 220 

of the Commission’s Rules of Practice, 17 C.F.R. § 201.220. 

If Respondent fails to file the directed answer, or fails to appear at a hearing after being duly 

notified, the Respondent may be deemed in default and the proceedings may be determined against 

him upon consideration of this Order, the allegations of which may be deemed to be true as 

provided by Rules 155(a), 220(f), 221(f) and 310 of the Commission’s Rules of Practice, 17 C.F.R. 

§§ 201.155(a), 201.220(f), 201.221(f) and 201.310.

This Order shall be served forthwith upon Respondent as provided for in the Commission’s 

Rules of Practice. 

IT IS FURTHER ORDERED that, pursuant to Rule 360(a)(2) of the Commission’s Rules 

of Practice, 17 C.F.R. § 201.360(a)(2), the Administrative Law Judge shall issue an initial decision 

no later than 75 days from the occurrence of one of the following events: (A) The completion of 

post-hearing briefing in a proceeding where the hearing has been completed; (B) Where the 

hearing officer has determined that no hearing is necessary, upon completion of briefing on a 

motion pursuant to Rule 250 of the Commission’s Rules of Practice, 17 C.F.R. § 201.250; or (C) 

The determination by the hearing officer that a party is deemed to be in default under Rule 155 of 

the Commission’s Rules of Practice, 17 C.F.R. § 201.155 and no hearing is necessary. 

In the absence of an appropriate waiver, no officer or employee of the Commission engaged 

in the performance of investigative or prosecuting functions in this or any factually related 

proceeding will be permitted to participate or advise in the decision of this matter, except as witness 

or counsel in proceedings held pursuant to notice. Since this proceeding is not “rule making” within 

the meaning of Section 551 of the Administrative Procedure Act, it is not deemed subject to the 

provisions of Section 553 delaying the effective date of any final Commission action.

For the Commission, by its Secretary, pursuant to delegated authority.

Brent J. Fields

Secretary