Academic

SEC Discovers Ponzi Scheme. What Was First Clue?

By Tim Zinnecker

Yesterday the SEC filed securities fraud charges against a firm for operating a $23 million investment scheme.  The SEC?s complaint alleges that the firm ?purported to use investor funds to invest in risk-free, high-yield investment programs in real estate, commodities, and bank instrument trading.?  Investors were allegedly promised returns ?of up to 25 percent within 30 to 45 days.?  But the complaint alleges, though, that ?approximately $13 million from new investors [was used] to pay principal and returns due to earlier investors.?  And the SEC also believes that some investor funds may have been misappropriated and used to purchase a home and finance a lavish party.  The scheme primarily targeted investors from California?s Hispanic-American community, who were allegedly assured that all funds would be invested in ?risk-free, high-yield investment programs? and were ?guaranteed safe.?

The name of the firm?  Maximum Return Investments, Inc.

The SEC?s press release is here.  Thanks to lounge visitor Mike Koehler for the (non-insider) tip.

Full post as published by The Faculty Lounge on April 14, 2009 (boomark / email).