The Securities and Exchange Commission (SEC) on Tuesday filed charges against a group of individuals and companies allegedly behind an elaborate Ponzi scheme that defrauded hundreds of investors.
The complaint charges five individuals and three companies with pocketing $20 million in investments from clients and paying more than $38 million in Ponzi-esque payments. The SEC claims the group transferred the rest of the money to transactions that were unrelated to the issuers’ supposed businesses.
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The scheme allegedly generated $102 million and was said to have involved more than 600 investors, who were assured they would receive double-digit returns on investments.
“We allege that the defendants engaged in a massive fraud and swindled investors to line their pockets with ill-gotten gains,” Marc P. Berger, director of the SEC’s New York Office, said in a statement. “Investors should be on high alert whenever they are promised guaranteed returns.”
The SEC’s complaint, which charges the named individuals and companies with violating anti-fraud laws, was filed in a Manhattan district court, where a judge agreed to freeze the defendants’ assets and implement a temporary restraining order.