Securities Law Prof Blog

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

Saturday, May 17, 2008

Court Enjoins Affinity Ponzi Scheme

On May 12, 2008, the federal district court for the Central District of California entered an order preliminary enjoining Safevest, LLC and its principals, Jon G. Ervin, Sr. and John V. Slye from future violations of the antifraud provisions of the federal securities laws. The SEC's complaint, filed in federal court in Santa Ana, California on May 1, 2008, alleges that since at least May 2007, the defendants have raised more than $25 million from more than 500 investors, including many from the Christian community, misrepresenting that investor funds would be pooled and invested in commodity futures trading, that the investment would generate daily profits ranging from 1.5% to 1.9%, and that investors could receive their money back within 72 hours of requesting it. In reality, according to the complaint, no investor money was invested in futures trading, and requests by investors for withdrawal of their funds have either not been honored or have only been partially honored. The complaint further alleges that, undisclosed to investors, the defendants paid more than $18 million to investors in Ponzi-like fashion. The defendants also allegedly misappropriated investor funds for the personal use of Ervin, Slye, and their family members.

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