INVESTOR FRAUD SUMMITS HELD TO INFORM CONSUMERS

FROM: U.S. DEPARTMENT OF JUSTICE
Monday, October 1, 2012
Investor Fraud Summits Across the Country Arm Consumers with Information to Protect Retirement Funds and Life Savings

Summits to be held in Connecticut, Tennessee, California, Colorado, Ohio and Florida
Attorney General Eric Holder and the Department of Justice’s U.S. Attorneys’ offices together, with the department’s Criminal and Civil Divisions, representatives from the FBI, Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission, the Bankruptcy Trustees, the Financial Industry Regulatory Authority (FINRA), AARP and the Better Business Bureau are holding investor fraud summits across the country to help consumers protect their hard-earned money from fraud. These summits will take place in Stamford, Conn.; Nashville, Tenn.; San Francisco; Denver; Cleveland and Miami and are a part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s (FFETF) Securities and Commodities Fraud Working Group.

The FBI reports an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses. Since 2011, the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that approximately 800 defendants have been charged, tried, pleaded or sentenced in approximately 500 federal prosecutions involving investor fraud. The total reported amount cheated from victims for this time period tops more than $20 billion. This staggering number includes cases where the total amount victims lost range from tens of thousands of dollars to hundreds of millions, and, in some cases, billions in hard-earned savings.

"Investor fraud crimes can erode faith in our financial markets, threaten our nation’s ongoing economic recovery, and undermine the fabric of our communities," said Attorney General Eric Holder. "That’s why protecting the American people from fraud is a top priority for today’s Justice Department. And through the Investor Fraud Summits we announce today, we’ll take our anti-fraud efforts to a new level - by raising awareness about these devastating offenses, educating consumers on how to report suspected fraud schemes and empowering members of the public to fight back."

Although the defendants in these federal prosecutions used a variety of tactics and schemes, they often took the same approach, guaranteeing high returns and, in many instances, providing falsified investment documents to victims. As a result, those victims lost retirement savings, military survivor benefits, family death settlements and money set aside for college tuition and mortgage payments. While the Justice Department has already obtained prison sentences for many of these scammers, including one sentence of up to 50 years, for many of the more 100,000 victims the damage to their families is irreparable.

Since 2011, the SEC, a FFETF partner agency, has charged 887 individuals and entities in 359 actions involving retail investor fraud. Nearly $9.7 billion have been alleged lost by over 1.2 million investors in those cases.

"Whether a cold-call, polished website, or email solicitation, fraudsters will use every means at their disposal to convince investors to part with their money," said SEC Director of Enforcement Robert Khuzami. "That is why investor education is so critical -- in maintaining financial health as much as physical health, an ounce of prevention is worth a pound of cure."

In addition to the investor fraud summits across the country, in the coming weeks the Victims’ Rights Committee of the Financial Fraud Enforcement Task Force will host an unprecedented event, in partnership with the Justice Department, the Certified Financial Planner Board and the Foundation for Financial Planning, to offer free financial consulting services to 8,000 victims of an investment fraud scheme that was indicted in Chicago. In this case, the defendant falsely guaranteed high rates of return in a Ponzi scheme that caused the loss of more than $300 million of investors’ funds. Many of the victims were retirees who found the promised high rates of return, coupled with other false promises, an attractive investment alternative for their individual retirement account (IRA) and other retirement-type investments.

The first investor fraud summit is taking place today in Stamford, from 9:00 a.m. to 1:00 p.m. EDT at the University of Connecticut - Stamford Campus. The summit is hosted by U.S. Attorney for the District of Connecticut David Fein, who is joined by Deputy Assistant Attorney General John Buretta, U.S. Attorney for the District of New Jersey Paul Fishman, U.S. Attorney for the Eastern District of New York Loretta Lynch, U.S. Attorney for the District of Massachusetts Carmen Ortiz, U.S. Attorney for the Middle District of Pennsylvania Peter Smith, U.S. Attorney for the District of Delaware Charles Oberly and U.S. Attorney for the District of Maine Thomas Edward Delahanty II, as well as Deputy Director of the SEC Division of Enforcement George Canellos. Several additional federal, state and local law enforcement and regulatory officials, as well as consumer protection experts, are on hand to educate members of the community to help identify instances of fraud or abuse and help them protect their investments. For more information on the summit in Stamford, please contact Thomas Carson at 203-821-3722 or thomas.carson@usdoj.gov.

The second investor fraud summit will take place in Nashville, on Thursday, Oct. 4, 2012, from 8:45 a.m. to 12:30 p.m. EDT at Vanderbilt University Law School’s Flynn Auditorium located at 131 21st Avenue South. The summit will be hosted by U.S. Attorney for the Middle District of Tennessee Jerry E. Martin. Guest speakers include FFETF Executive Director Michael Bresnick, U.S. Attorney for the Western District of Virginia Timothy Heaphy, U.S. Attorney for the Northern District of Georgia Sally Yates, U.S. Attorney for the Western District of North Carolina Anne Tompkins, U.S. Attorney for the District of South Carolina Bill Nettles and Assistant Director for the Office of Legal & Victim Programs in the Executive Office of U. S. Attorneys Kristina Neal. These speakers will be joined by other U.S. Attorneys from neighboring states, Enforcement Attorney for the SEC Atlanta Regional Office William Dixon as well as representatives from the Financial Crimes Division of the FBI, the SEC and the Better Business Bureau. The summit will focus on educating the investing public on how to avoid falling prey to investment fraud schemes. For more information on the summit in Nashville, please contact David Boling at 615-736-5956 or david.boling2@usdoj.gov.

The third investor fraud summit will take place Tuesday, Oct. 9, 2012, in Walnut Creek, Calif., from 9:00 a.m. to 1:00 p.m. PDT at the Rossmoor Retirement Community - Gateway Complex located at 1001 Rain Road. The event will be hosted by U.S. Attorney for the Northern District of California Melinda Haag. Guest speakers include U.S. Attorney for the Eastern District of California Ben Wagner, U.S. Attorney for the Central District of California André Birotte, U.S. Attorney for the Southern District of California Laura Duffy and Director of the SEC San Francisco Regional Office Marc Fagel. Other U.S. Attorneys who will be present include U.S. Attorney for the District of Oregon Amanda Marshall, U.S. Attorney for the District of Alaska Karen L. Loeffler and U.S. Attorney for the District of Hawaii Florence T. Nakakuni. Representatives from FinCEN, FBI, Google and CNBC will also participate in informative panels highlighting the rise in investment fraud schemes in the United States; useful strategies to identify fraudsters; and new, proactive approaches to help protect your savings and investment. This event is open to residents of the Rossmoor Retirement Community and the media only. For more information on the summit in Walnut Creek, please contact Jack Gillund at 415-436-6599 or jack.gillund@usdoj.gov.

The fourth investor fraud summit will take place in Denver on Wednesday, Oct. 10, 2012, from 8:00 a.m. to 12:00 p.m. MDT at the Tivoli Building - Turnhalle Auditorium located at 900 Auraria Parkway, Suite 150. The summit, lead by U.S. Attorney for the District of Colorado John Walsh, will feature U.S. Attorney for the District of Utah David Barlow, U.S. Attorney for the District of Montana Michael Cotter, U.S. Attorney for the Western District of Oklahoma Sanford Coats, U.S. Attorney for the District of New Mexico Kenneth Gonzalez, U.S. Attorney for the District of Kansas Barry Grissom and Colorado Attorney General John Suthers. Multiple federal, state and local officials, including Director of the SEC’s Denver Regional Office Donald Hoerl, as well as representatives from consumer and business groups will be on hand for informative and interactive panels. Participants will learn what steps are being taken by law enforcement to help protect them from fraud, warning signs and how to outsmart scams and protect their hard-earned money. For more information on the summit in Denver, please contact Matt Kirsch at matthew.kirsch@usdoj.gov or 303-454-0100.

The fifth investor fraud summit will take place Thursday, Oct. 11, 2012, in Beachwood, Ohio, from 8:30 a.m. to 12:30 p.m. EDT at the Montefiore Senior Living Center located at 1 David Myers Parkway. The summit will be hosted by U.S. Attorney for the Northern District of Ohio Steven Dettelbach and attendees will include U.S. Attorney for the Eastern District of Michigan Barbara McQuade, U.S. Attorney for the Southern District of Ohio Carter Stewart and U.S. Attorney for the Western District of Pennsylvania David Hickton. Federal, state and local law enforcement officials, including Director of the SEC’s Chicago Regional Office Merri Jo Gillette, along with representatives from consumer groups will discuss investor and consumer fraud, with a particular focus on scams that target senior citizens and the elderly. These experts will offer advice, discuss fraud trends and detail the best ways to protect yourself and your savings. For more information on the summit in Beachwood, please contact Jena Suhadolnik at 216-622-3695.

The sixth and final investor fraud summit will take place in Miami on Friday, Oct. 12, 2012, from 9:00 a.m. to 1:00 p.m. EDT at the Miami Dade College – in the Chapman Conference Center, located at 245 N.E. Fourth Street, Bldg. 3, Room 3210. U.S. Attorney for the Southern District of Florida Wifredo Ferrer will host the summit that will feature Attorney General Eric Holder. They will be joined by U.S. Attorney for the Middle District of Florida Robert O’Neill, U.S. Attorney for the Northern District of Florida Pamela Marsh, U.S. Attorney for the Northern District of Alabama Joyce Vance, Director of the SEC’s Miami Regional Office Eric Bustillo and representatives from the Florida Office of Financial Regulation, FBI, FTC, the Better Business Bureau, AARP, FINRA and others to discuss issues associated with investment fraud schemes and help educate investors on how to avoid falling victim to such schemes. The summit will focus on recent investment fraud prosecutions, fraud trends and will include testimonies from victims of investment fraud and a discussion of preventive measures. For more information on the summit in Miami, please contact Lilian Cruz at 305-961-9393.

President Obama established the interagency Financial Fraud Enforcement Task Force (FFETF) to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force, chaired by Attorney General Eric Holder, includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.

A FAILURE TO REGISTER AS A COMMODITY TRADING ADVISOR

FROM: COMMODITY FUTURES TRADING COMMISSION
September 28, 2012

Federal Court Orders Martin B. Rosenthal to Pay $1.2 Million for Aiding and Abetting the Making of False Statements to the NFA, Failing to Register as a Commodity Trading Advisor, and Violating a Previous CFTC Order

　

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court order requiring Martin B. Rosenthal of Fort Lauderdale, Fla., to pay a civil monetary penalty of $598,000 and disgorgement of $598,000 for aiding and abetting the willful concealment of material facts and the making of false statements to the National Futures Association (NFA), violating a previous CFTC order, and acting as an unregistered Commodity Trading Advisor (CTA). The order also imposes permanent trading and registration bans against Rosenthal and permanently prohibits him from further violations of the Commodity Exchange Act, as charged.

The consent order for permanent injunction, entered on September 27, 2012, by Judge James I. Cohn of the U.S. District Court for the Southern District of Florida, stems from a CFTC complaint filed on March 12, 2012 (see CFTC Press Release 6203-12, March 12, 2012).

The order finds that Rosenthal aided and abetted the willful concealment of material facts and the making of false statements to the NFA about a business relationship that Angus Jackson of Florida maintained with Rosenthal, by creating fake invoices purporting to show consulting expenses incurred by Rosenthal’s company that were, in fact, compensation paid to Rosenthal for trading client accounts.

Additionally, the order finds that from approximately January 2000 to at least December 2008, Rosenthal traded futures and options for his clients at Angus Jackson, while failing to register as a CTA and in violation of a trading prohibition for failing to comply with a previous CFTC order. An earlier CFTC order prohibited Rosenthal from trading on registered entities because he failed to pay a 1988 CFTC reparations award.

The CFTC thanks the NFA for its cooperation and assistance in this matter.

CFTC Division of Enforcement staff members responsible for this case are Brian M. Walsh, Elizabeth L. Davis, Kenneth McCracken, Rick Glaser, and Richard Wagner.

CFTC ALLEGES INDIVIDUALS AND COMPANY RAN $53 MILLION WORLDWIDE OFF-EXCHANGE FOREX SCHEME

FROM: COMMODITY FUTURES TRADING COMMISSION

CFTC Charges Australian Resident Senen Pousa, U.S. Resident Joel Friant, and Their Company, Investment Intelligence Corp., with Operating a Fraudulent $53 Million Worldwide Off-Exchange Forex Scheme, and Texas-based Michael Dillard and Elevation Group, Inc. with Registration Violations

Investment Intelligence does business as ProphetMax Managed FX

Federal court issues order freezing assets of defendants Pousa, Friant, and Investment Intelligence, and prohibiting destruction of books and records

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) filed a civil enforcement action charging Senen Pousa of Australia, Joel Friant of Bellingham, Wash., and their company, Investment Intelligence Corporation (IIC), an Australian corporation, with operating a fraudulent off-exchange foreign currency (forex) scheme. The complaint also charges Michael Dillard and Elevation Group, Inc., both of Austin, Texas, with registration violations. The scheme allegedly accepted at least $53 million from at least 960 clients worldwide, including at least 697 clients in the United States, and clients in Australia, the United Kingdom, Canada, Germany, the Netherlands, and Singapore, among other countries. None of the defendants has ever been registered with the CFTC.

On the same day the CFTC complaint was filed, September 18, 2012, Judge Lee Yeakel of the U.S. District Court for the Western District of Texas issued an emergency order freezing the assets of defendants Pousa, Friant, and IIC and prohibiting the destruction of books and records.

The CFTC complaint alleges that from at least January 1, 2012 through the present IIC, through Pousa, Friant and its other agents, and defendants Dillard and Elevation Group, utilized "wealth creation" webcasts, webinars, podcasts, emails, and other online seminars via the Internet to directly and indirectly solicit actual and prospective clients worldwide to open forex trading accounts at IIC. The complaint further alleges that clients were promised by IIC, through Pousa, Friant, and other agents 1) a monthly return of 9 percent, 2) that IIC’s managed forex trading would risk less than 3 percent of a client’s capital per transaction, 3) that IIC was able to limit the risk inherent to forex trading by limiting its managed forex trading to 2 to 5 trades per month, and 4) that IIC has six "proprietary traders" working 24 hours a day trading clients’ funds. The CFTC complaint alleges that all of these representations to clients were false.

On or about May 16-17, 2012, the complaint alleges that clients suffered a loss of over 60 percent of their investment, when IIC, by and through its agents, entered over 200 forex trades in each client’s account in violation of the representations made by IIC, by and through its agents.

The CFTC complaint seeks restitution, rescission, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the anti-fraud provisions of federal commodities laws, as charged.

Further, on September 18, 2012, the court entered a consent order of permanent injunction and ancillary equitable relief against defendants Michael Dillard and Elevation Group, Inc. According to the consent order, the court found that Elevation Group acted as an Introducing Broker and solicited orders from non-ECPs in connection with leveraged forex transactions without registering with the CFTC. The court further found that Dillard acted as an unregistered Associated Person of the Elevation Group, according to the order.

The CFTC greatly appreciates the assistance of the Australian Securities & Investments Commission, U.K. Financial Services Authority, Hungarian Financial Supervisory Authority, Netherlands Authority for the Financial Markets, Financial Markets Authority of New Zealand, and New Zealand Serious Fraud Office.

Further, the CFTC greatly appreciates the assistance of the Texas State Securities Board, Washington State Department of Financial Institutions, the U.S. Attorney for the Western District of Texas, the Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission.

CFTC Division of Enforcement staff members responsible for this matter are Kyong Koh, Michael Amakor, JonMarc Buffa, Mary Lutz, Timothy Mulreany, Paul Hayeck, and Joan Manley.

SEC CHARGES FORMER CEO AND CHAIRMAN OF MAMTEK U.S. WITH FRAUD IN THE OFFER AND SALE OF MUNICIPAL BONDS

FROM: SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today filed suit in U.S. District Court for the Central District of California, charging former CEO and chairman of Mamtek U.S., Bruce Cole, with fraud related to the offer and sale of municipal bonds.

The SEC’s complaint alleges that Cole executed a scheme to defraud investors and made material misrepresentations and omissions in connection with the July 2010 offer and sale of $39 million of appropriations credit bonds backed by the City of Moberly, Missouri ("Moberly"). The bond offering was intended to finance a sucralose processing plant in Moberly that Mamtek would construct and operate. The SEC alleges that Cole executed his fraud by directing unsuspecting Mamtek employees to take actions that diverted over $900,000 in bond proceeds for his and his wife’s personal use and by misleading city officials and bondholders about the use of those proceeds.

According to the complaint, prior to the close of the bond offering, Cole directed Mamtek employees and consultants to create false documentation for a nonexistent company to falsely justify fictitious expenses for the sucralose project. The complaint alleges he then instructed Mamtek employees to wire his wife, Nanette H. Cole, $900,000 in bond proceeds, which were used to pay among other things, their mortgage, credit card debt, homeowners and auto insurance, and household employees, in part, under the false pretense that she was an agent of the sham company.

The complaint further alleges that as a precondition to the issuance of the bonds, Cole signed a certificate representing certain portions of the Official Statement delivered to bondholders for the $39 million offering were not false or misleading. However, at the time that Cole signed the document, he had already directed the creation of the false documentation and had made preliminary plans to divert and misuse the bond proceeds, rendering his representation in the closing certificate false. In doing so, he misrepresented the use of bond proceeds and the accuracy of the Official Statement.

By engaging in this conduct, Cole has violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, for making material misrepresentations and omissions and engaging in a scheme to defraud the city and bondholders. Through this Complaint, the Commission seeks a permanent injunction, disgorgement with prejudgment interest, and a civil penalty. The Commission further names Nanette Cole as a relief defendant because she obtained the bond proceeds from her husband, and seeks return of those funds.

CEO CHARGED BY SEC WITH FRAUD RELATED TO BOND MARKET

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

The Securities and Exchange Commission today filed suit in U.S. District Court for the Central District of California, charging former CEO and chairman of Mamtek U.S., Bruce Cole, with fraud related to the offer and sale of municipal bonds.

The SEC’s complaint alleges that Cole executed a scheme to defraud investors and made material misrepresentations and omissions in connection with the July 2010 offer and sale of $39 million of appropriations credit bonds backed by the City of Moberly, Missouri ("Moberly"). The bond offering was intended to finance a sucralose processing plant in Moberly that Mamtek would construct and operate. The SEC alleges that Cole executed his fraud by directing unsuspecting Mamtek employees to take actions that diverted over $900,000 in bond proceeds for his and his wife’s personal use and by misleading city officials and bondholders about the use of those proceeds.

According to the complaint, prior to the close of the bond offering, Cole directed Mamtek employees and consultants to create false documentation for a nonexistent company to falsely justify fictitious expenses for the sucralose project. The complaint alleges he then instructed Mamtek employees to wire his wife, Nanette H. Cole, $900,000 in bond proceeds, which were used to pay among other things, their mortgage, credit card debt, homeowners and auto insurance, and household employees, in part, under the false pretense that she was an agent of the sham company.

The complaint further alleges that as a precondition to the issuance of the bonds, Cole signed a certificate representing certain portions of the Official Statement delivered to bondholders for the $39 million offering were not false or misleading. However, at the time that Cole signed the document, he had already directed the creation of the false documentation and had made preliminary plans to divert and misuse the bond proceeds, rendering his representation in the closing certificate false. In doing so, he misrepresented the use of bond proceeds and the accuracy of the Official Statement.

By engaging in this conduct, Cole has violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, for making material misrepresentations and omissions and engaging in a scheme to defraud the city and bondholders. Through this Complaint, the Commission seeks a permanent injunction, disgorgement with prejudgment interest, and a civil penalty. The Commission further names Nanette Cole as a relief defendant because she obtained the bond proceeds from her husband, and seeks return of those funds.

SEC EDUCATES PUBLIC ON "AFFINITY FRAUD"

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help educate investors about affinity fraud, a type of investment scam that preys upon members of identifiable groups, such as religious or ethnic communities or the elderly.

What is Affinity Fraud?

Affinity fraud almost always involves either a fake investment or an investment where the fraudster lies about important details (such as the risk of loss, the track record of the investment, or the background of the promoter of the scheme). Many affinity frauds are Ponzi or pyramid schemes, where money given to the promoter by new investors is paid to earlier investors to create the illusion that the so-called investment is successful. This tricks new investors into investing in the scheme, and lulls existing investors into believing their investments are safe. In reality, even if there really is an actual investment, the investment typically makes little or no profit. The fraudster simply takes new investors’ money for the fraudster’s own personal use, often using some of it to pay off existing investors who may be growing suspicious. Eventually, when the supply of investor money dries up and current investors demand to be paid, the scheme collapses and investors discover that most or all of their money is gone.

How Does Affinity Fraud Work?

Fraudsters who carry out affinity scams frequently are (or pretend to be) members of the group they are trying to defraud. The group could be a religious group, such as a particular denomination or church. It could be an ethnic group or an immigrant community. It could be a racial minority. It could be members of a particular workforce – even members of the military have been targets of these frauds. Fraudsters target any group they think they can convince to trust them with the group members’ hard-earned savings.

At its core, affinity fraud exploits the trust and friendship that exist in groups of people who have something in common. Fraudsters use a number of methods to get access to the group. A common way is by enlisting respected leaders from within the group to spread the word about the scheme. Those leaders may not realize the "investment" is actually a scam, and they may become unwitting victims of the fraud themselves.

Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue legal remedies. Instead, they try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.

How to Avoid Affinity Fraud

Here are a few tips to help you avoid affinity fraud.

Even if you know the person making the investment offer, be sure to research the person’s background, as well as the investment itself – no matter how trustworthy the person who brings the investment opportunity to your attention seems to be. Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not.
Never make an investment based solely on the recommendation of a member of an organization or group to which you belong. This is especially true if the recommendation is made online. An investment pitch made through an online group of which you are a member, or on a chat room or bulletin board catered to an interest you have, may be a fraud.
Do not fall for investments that promise spectacular profits or "guaranteed" returns. Similarly, be extremely leery of any investment that is said to have no risks. Very few investments are risk-free. Promises of quick and high profits, with little or no risk, are classic warning signs of fraud.
Be skeptical of any investment opportunity that you can’t get put in writing. Fraudsters often avoid putting things in writing. Avoid an investment if you are told they do "not have the time to put in writing" the particulars about the investment. You should also be suspicious if you are told to keep the investment opportunity confidential or a secret.
Don’t be pressured or rushed into buying an investment before you have a chance to research the "opportunity." Just because someone you know made money, or claims to have made money, doesn’t mean you will, too. Be especially skeptical of investments that are pitched as "once-in-a-lifetime" opportunities, particularly when the salesperson bases the recommendation on "inside" or confidential information.
Recent Affinity Fraud Schemes

The SEC’s Division of Enforcement regularly investigates and prosecutes affinity frauds targeting a wide spectrum of groups. Here are examples of some recent cases.

SEC Charges Ponzi Scheme Promoter Targeting Primarily African-American Churchgoers

Ponzi scheme promoter sold promissory notes bearing purported annual interest rates of 12% to 20%, telling primarily African-American investors that the funds would be used to purchase and support small businesses such as a laundry, juice bar, or gas station. Promoter also sold "sweepstakes machines" that he claimed would generate investor returns of as much as 300% or more in the first year.

SEC Charges Company and its Owners with Conducting an Offering Fraud Targeting Christian Investors

Ponzi scheme promoters raised almost $6 million from nearly 80 evangelical Christian investors through fraudulent, unregistered offerings of stock and short-term, high-yield promissory notes issued by their company, which was marketed as a voice-over-internet-protocol video services provider around the world.

SEC Shuts Down Ponzi Scheme Targeting Persian-Jewish Community in Los Angeles

SEC obtained an emergency court order to halt an ongoing $7.5 million Ponzi scheme that targeted members of the Persian-Jewish community in Los Angeles. The SEC’s complaint alleged that the promoter, himself a member of the Persian-Jewish Los Angeles community, raised funds from 11 investors and used nearly $1.6 million investor funds to buy jewelry, high-end cars, and VIP tickets to sporting events. He lured investors with promises of exorbitant returns in purported pre-IPO shares of well-known companies.

SEC Charges South Florida Man in Investment Fraud Scheme

Fraudster raised nearly $11 million claiming returns as high as 26%. He typically met and pitched prospective investors over meals at expensive restaurants in and around Fort Lauderdale. His clients typically came to him through word-of-mouth referrals among friends and relatives. A significant number of the victims of his scheme were members of the gay community in Wilton Manors, Florida.

SEC Halts Affinity Fraud Aimed at the Hispanic community

Defendants raised $817,500 from investors representing to them that their funds would be used to develop a financial services firm serving the Hispanic community. The promoter used a large part of the investors’ money to engage unsuccessfully in high risk "day-trading" of stocks, pay personal living, travel and entertainment expenses or make other, unexplained expenditures with no connection to the purported start-up business activities.

SEC Charges Real Estate Developer in Miami Affinity Fraud

Miami-based developer conducted an affinity fraud and ponzi scheme involving real estate investments that raised $135 million from more than 400 investors, primarily from the South Florida Cuban exile community. Among other things, the developer paid existing investors with new investors’ funds and assigned the same real estate collateral to multiple investors.

SEC Halts Online Affinity Fraud

Fraudster raised at least $2.4 million from at least five individuals in 2008 and 2009. He offered and sold promissory notes and convinced investors to grant him trading authority over money contained in online brokerage accounts. While doing so, he misrepresented his intended use of the money, the risks of his trading, the source of the money used to pay the guaranteed fixed returns, and falsely guaranteed repayment of investors’ principal.

What Should You Do If You Suspect Affinity Fraud?

If you think you may be aware of a possible affinity fraud – or may have lost money in an affinity fraud – please contact the SEC through the SEC Complaint Center, http://www.sec.gov/complaint/select.shtml. You can also contact your state’s securities administrator. You can find links and addresses for your state regulator by visiting the North American Securities Administrators Association’s website.