Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, August 10, 2007

SEC Efforts Against Ponzi Schemes

The SEC reports today on three enforcement actions against Ponzi or other fraudulent schemes targeted at elderly and retired investors -- a reminder that an important and perhaps under-publicized part of  SEC enforcement goes toward attempts to stamp out these blatant frauds that continue to appeal to unsophisticated and naive members of the investing public.  They are:

(1) A fraudulent foreign currency option scheme that collected more than $11 million from over 100 investors.  The creator of this Ponzi scheme was described by the SEC as a twice-convicted felon, with four decades of securities fraud, who embarked on this venture shortly after release from prison.

(2) A fraudulent offer and sale of Secured Debt Obligations (SDOs) that raised more than $55 million from investors.

(3) Fraudulent sales of mining claims that guaranteed 7-9% annual revenues from mining operations, but in reality was a Ponzi scheme that raised over $20 million from over 100 investors.

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