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

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Saturday, June 26, 2010

SEC Charges that Florida Benefits Consulting Firm Defrauded Government Employees

The SEC obtained an asset freeze and other emergency relief against a Jacksonville, Fla., retirement benefits consulting firm that defrauded active and retired government employees and law enforcement agents nationwide through a Ponzi scheme that promised safe investments.  The SEC charged the estate of the recently deceased Kenneth Wayne McLeod, his benefits consulting firm, Federal Employee Benefits Group, Inc. (FEBG), and his registered investment adviser, F&S Asset Management Group, Inc. with fraudulently soliciting government employees to invest in a government bond fund that didn't exist.

The SEC alleges that McLeod lured many of his investors through retirement benefits seminars he gave at government agencies nationwide. According to the SEC's complaint, filed on June 24, 2010, in the U.S. District Court for the Southern District of Florida, McLeod traveled to various state and federal government agencies to conduct FEBG employee benefits counseling and planning seminars.He raised at least $34 million since 1988 from an estimated 260 investors around the country. The security of the government bonds was a key element of McLeod's deception but he never purchased any bonds. Instead, he used the investors' retirement savings to conduct a Ponzi scheme, to pay himself, and to pay for lavish entertainment, including annual trips to the Super Bowl for himself and 40 friends.

 The SEC alleges that the purported safety of the bond fund was an important factor in some investors' decision to retire from law enforcement or public service. Based on McLeod's misrepresentations, some investors rolled over their retirement and savings accounts into the bond fund or invested their inheritances and their children's tuition savings.

On June 24, 2010, the court entered an ex parte emergency order temporarily restraining FEBG and F&S Asset Management and freezing their assets and the assets of the Estate of McLeod. The order also provides for expedited discovery, a sworn accounting and the preservation of records.

http://lawprofessors.typepad.com/securities/2010/06/sec-charges-that-florida-benefits-consulting-firm-defrauded-government-employees.html

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