SEC Halts $23 Million Ponzi Scheme Targeting Haitians
SEC Halts $23 Million Ponzi Scheme Targeting Haitians (Update2)
By David Scheer
Dec. 30 (Bloomberg) -- The U.S. Securities and Exchange Commission, under congressional scrutiny for failing to detect Bernard Madoff’s alleged $50 billion Ponzi scheme, said it halted an unrelated $23 million scam targeting Haitian-Americans.
A federal judge in Florida agreed to freeze assets and appoint a receiver after the SEC sued George Theodule and two companies he helped control, claiming he lured thousands of investors by promising to double their money within 90 days, the agency said in a statement today. Theodule lost at least $18 million on securities trades in the past year, while early investors got funds raised from later participants, the SEC said.
Theodule, 48, encouraged people to form investment clubs that funneled funds to the firms, raising more than $23 million since November 2007, the SEC said. Participants were told some profits would fund ventures benefiting the Haitian community in the U.S., Haiti and Sierra Leone, it said.
“This alleged Ponzi scheme preyed upon unsuspecting members of a close-knit community, attempting to take advantage of the trust they had in each other,” Linda Thomsen, the SEC’s enforcement director, said in the agency’s statement.
The SEC lawsuit also names Creative Capital Consortium LLC, based in Lake Worth, Florida, and A Creative Capital Concept$ LLC, which is no longer operating. Theodule, who moved from Florida to Loganville, Georgia, in September, managed both firms, operating Creative Capital Concept$ with two other people, the SEC said without identifying them. The investigation continues, the agency said.
An attorney for Theodule and the firms couldn’t immediately be located. There was no immediate response to a voicemail left at a Georgia phone listing in Theodule’s name.
‘Food on the Table’
Investors named Theodule and members of his family in a lawsuit filed Dec. 26 at federal court in West Palm Beach, Florida, seeking class-action, or group, status.
“His ability to get people to reinvest was compromised by the bad economy,” said David A. Rothstein, an attorney at Dimond Kaplan & Rothstein in Miami, which represents about 50 investors. “It was money they needed to put food on the table, and they weren’t going to continue to roll it over.”
Madoff, the 70-year-old founder of Bernard L. Madoff Investment Securities LLC in New York, was arrested Dec. 11 after allegedly telling his two sons he had been using money from new investors to pay off old ones in what may be the biggest such swindle in history. The House Financial Services Committee will hold a hearing Jan. 5 to examine regulatory efforts to catch such scams.
Madoff’s clients included banks, hedge funds, charities, universities and individual wealthy investors. They had about $37 billion with his firm, according to a Bloomberg News tally of disclosures and press reports.
To contact the reporter on this story: David Scheer in New York at firstname.lastname@example.org.
Last Updated: December 30, 2008 15:42 EST