Blotter
Fleecing the Flock:
The SEC charged seven Queens, NY church leaders with carrying out a fraudulent investment scheme that targeted elderly churchgoers. The seven individuals defrauded 80 investors out of more than $12 million between January and November 2005. According to the SEC's complaint, these church leaders plied their parishioners with promises of 75 percent investment returns if they invested in two hedge funds — the Logos Fund and the Donum Fund. Of course, they didn't invest the millions; they spent it — on luxury cars, jewelry, clothing, meals and expensive foreign vacations. “Affinity fraud is a particularly sinister scam that exploits investors in closeknit communities,” said Robert Khuzami, director of the SEC's Division of Enforcement. “The fact that many of the victims of this scheme were senior citizens and members of the same church as the defendants makes this fraud particularly reprehensible,” said James Clarkson, acting director of the SEC's New York Regional Office. The SEC complaint, filed in Brooklyn, N.Y., charges Isaac Ovid, Aaron Riddle, J. Jonathan Coleman, Stephen Cina, Cory Martin, Timothy Smith and Robert Riddle.
Ponzi Count Steady:
The SEC put a stop to another Ponzi scheme in mid-April — its 15th announced Ponzi stoppage since December. (The SEC doesn't announce every Ponzi scheme it halts or catches, according to a spokesperson. Why certain Ponzi schemes are published in press releases and others are not is unclear.) This one occurred in El Segundo, California where Clelia Flores and Maximum Return Investments (sounds safe, right?) targeted California's Hispanic-American community, promising returns of up 25 percent each month. Instead, Flores stuck to standard Ponzi operating procedure by passing off new investor funds to older vintage investors etc. etc. The SEC's complaint, filed in U.S. District Court in L.A., alleges Flores and MRI attracted $23 million from more than 150 investors from seven states between 2006 and 2008 through word of mouth, referrals and even conferences in hotels. The SEC's complaint states that Flores claimed all investor funds would be used to invest in MRI's risk-free, high-yield investment programs and that investor principal would be “guaranteed safe.” Promotional materials promised that the investors' principal would be fully secured by a bank-endorsed guarantee and Flores' firm claimed the investments were insured. The SEC alleges Flores did in fact invest $5.6 million in high-risk ventures like start-up companies that never paid any returns. The complaint also alleges Flores stole $3.5 million to purchase a home and pay other personal expenses, including a party for investors
