W Financial Group, LLC, and others Scam Elderly Investors
SEC Charges Houston Company With Sales of Fraudulent Securities to Mostly Elderly Investors, W Financial Group, LLC, Adley H. Abdulwahab, Michael K. Wallens, Sr. and Michael K. Wallens, Jr.
"The Commission's Complaint alleges that the defendants, directly and through sales agents, have raised at least $17.9 million from September 2006 through February 2007 from the sale of SDOs to at least 182 investors located primarily in Texas, with additional investors in Wisconsin.Most of WFG's customers were elderly or seeking to invest retirement funds.
WFG investors were lured into purchasing SDOs through a series of misrepresentations and omissions that portrayed SDOs to be a higher-yielding, but equally safe, alternative to bank CDs.
For instance, the defendants' offering materials asserted that SDOs were insured or reinsured by Lloyd's of London and The Republic Group.
WFG's offering materials also represented that WFG would keep investor funds separate and apart from its property and would use investor funds for limited, specially enumerated purposes, such as creating or purchasing automobile financing receivables or placing the funds in government securities or highest-quality corporate bonds.
The Commission alleges, however, that these representations are materially false and misleading.
For instance, the Commission contends that the SDOs are not insured as represented, if at all.
Indeed, according to the Complaint, the Lloyd's and Republic Group insurance provides only miniscule coverage at best. Moreover, as detailed in the Complaint, the defendants misused investor funds.
The Complaint alleges, for example, that defendants did not maintain investor funds in separate accounts and placed only a fraction of the funds in the investment vehicles disclosed to investors.
Instead, defendants allegedly have used millions of dollars to purchase the majority interest in an electric power company and fund its operations, to buy and develop residential real estate, and to buy unauthorized investment vehicles, such as a life settlement contract."
Would like to know about how this pitch worked.
Seems a little hard to understand how investing in automobile receivables is attractive as an investment.
Anyone have any ideas about the scripts used in this one?
Read More From BizOp News
March 19, 2008
Ponzi Con Criminal - Stole From Seniors
Interesting story from the SEC about Gibbs who allegedly ran a Forex Ponzi scheme.
"The Securities and Exchange Commission today announced the filing of a settled civil injunctive action in the United States District Court for the Eastern District of Virginia against Ralph Gregory Gibbs, a resident of New Haven, West Virginia, who operated an offering fraud and "Ponzi" scheme.The Complaint alleges that since at least April 2005 through February 2007, Gibbs, doing business as Golden Summit Group, raised approximately $21 million from at least 150 investors in at least 25 states through the offer and sale of securities.
Based on Gibbs' promises that they would receive large returns on their investments and guaranteed returns of their principal, a significant number of the investors, many of whom were elderly, retired or otherwise living on limited incomes, liquidated their retirement savings or obtained home equity loans to invest the money with Gibbs."
The reason I think that this is a interesting is because the SEC claims that
"The Commission's Complaint also alleges that of the approximately $21 million he raised from investors, Gibbs deposited only approximately $8.1 million into his Forex trading account, where he subsequently lost over $6.3 million of investor funds through his trading of currencies."
Who did he lose the money to? Were these real trades or only faked up loses? Trader kickbacks? Here is person faking up statements to this clients; perfectly reasonable to think that he was faking up the losses or at least getting a kickback on his trading volumes. Be worth knowing.
