Capital First Fund - Almost a Ponzi Scheme?
According to the SEC, Capital First Fund, an unregistered security purchasing distressed debt, "solved" the first problem. How did the do it?
Technorati Tags: ponzi schemes, business opportunity, fraud artist, distressed debt, scammer, bankrupt, naive, induction, legitimate, fisher, themes, sec
According to Judge's Fisher's order, the defendants contended:
"Defendants argue that the Funds had a sufficient cash flow to pay investor distributions, that the distributions were repayments of investors’ principal, and that once the principal was fully repaid, then distributions would represent profits. However, Plaintiff provides evidence that at least some investors were told or led to believe through omission that they would be receiving a 1% (or more) return of profits" (my emphais)
It didn't work. Judge Fischer was not interested in whether this scheme fit the definition of a Ponzi, which Charles Ponzi's scheme did satisfy either, the Judge was only interested in whether individuals were mislead by the promoter Lund and Capital First Fund.
"First, Defendants allegedly enticed investors with promises of 1-3% monthly returns on their investments from the Funds’ operations; however, these distributions, when made, were actually repayments of investors’ capital. Second, Defendants assured investors that the Funds’ business yielded substantial profits; however, the Funds actually yielded net losses instead of profits. Plaintiff’has shown, at the least, that there appears to be little likelihood that the funds could ever be profitable -- and certainly not nearly as profitable as represented."
In the meantime, Lund apparently refinanced his house and skipped with the money after the Receiver was put in place by Court order and the SEC is seeking to jail Lund for this contempt of court. Not clever enough, on two counts.
Technorati Tags: ponzi schemes, business opportunity, fraud artist, distressed debt, scammer, bankrupt, naive, induction, legitimate, fisher, themes, sec
