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Apr 25, 2022 by |

San Francisco Financial Elder Abuse Attorneys: SEC Charges Brothers With Running Ponzi Scheme On Elderly Investors

ATTORNEY NEWSLETTER

Alleged Scheme Ran For Six Years

30 Elderly Investors Lost Money

Charges Of Financial Elder Abuse, And Securities Law Violations

While financial elder abuse may be limited to isolated transactions exploiting specific older individuals, financial elder abuse may also be perpetrated on numerous elderly victims.  Seniors are often targets of unsuitable or risky ventures promising high returns or outright Ponzi schemes, where money collected from new investors is used to pay existing investors, and there really is no actual investment of funds at all. Such schemes violate securities laws and, when the victims are seniors, also constitute financial elder abuse and may involve other crimes, including federal and State securities law violations.  See Penal Code § 368 (crime of financial elder abuse) and Cal. Welf. & Inst. Code § 15610.30 (definition of financial elder abuse).   Evans Law Firm, Inc. can represent you if you lose money in a Ponzi scheme or any other type of securities fraud or financial elder abuse here in San Francisco or elsewhere in California.  If you have, call our lawyers today at (415)441-8669.  Our toll-free number is 1-888-50EVANS (888-503-8267).

SEC Charges Against Organizers Of Alleged Ponzi Scheme[1] 

The U.S. Securities and Exchange Commission (SEC) has charged two brothers with orchestrating a $2.7 million Ponzi scheme targeting unsophisticated elderly investors. The SEC alleges that defendants told investors from 2008 to 2014 they would profit in a real-estate venture.  In some instances, the SEC alleges that defendants recommended seniors sell their retirement assets in order to invest in the venture, which had no operations.  As part of the scheme, defendants created a website and brochure advertising an opportunity that gave “the senior investor a guaranteed monthly income,” according to the SEC. The SEC alleges that defendant used the money seniors invested for personal expenses, including sporting event tickets and his daughter’s college tuition, while transferring some of the funds to a janitorial business of which he and his brother were partners.  The real estate venture purportedly bought and developed real estate, but, according to the SEC had no investment portfolio and no ability to provide any income at all to the seniors. “Instead of investing in real estate, hundreds of thousands of dollars of investor funds were used to pay other investors,” the SEC said in its complaint.  The brothers neither admitted nor denied the SEC’s charges, according to the agency’s statement. One defendant was ordered to pay more than $1.9 million plus a $160,000 civil penalty; his brother was ordered to repay about $20,000 and a $100,000 civil penalty; and two companies controlled by defendants were held liable for about $591,000, according to the SEC.

“Red Flags” Of Ponzi Schemes

Here are some of the classic “red flags” of Ponzi schemes like the one involved in the reported case:

  • High returns with little or no risk.  Be especially suspicious of any “guaranteed” investment opportunity like the promise allegedly made in the reported case.
  • Overly consistent returns. Investments tend to go up and down over time. Be skeptical about an investment that regularly generates positive returns regardless of overall market conditions.
  • Unregistered investments. Ponzi schemes typically involve investments that are not registered with the SEC or with state regulators. Registration is important because it provides investors with access to information about the company’s management, products, services, and finances.
  • Unlicensed sellers. Federal and state securities laws require investment professionals and firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms.
  • Issues with paperwork. Account statement errors may be a sign that funds are not being invested as promised.
  • Difficulty receiving payments. Be suspicious if you don’t receive a payment or have difficulty cashing out. Ponzi scheme promoters sometimes try to prevent participants from cashing out by offering even higher returns for staying put.

Contact Us

If you or a loved one has been the victim of a Ponzi scheme or other form of financial elder abuse in San Francisco or elsewhere in California contact Ingrid M. Evans at Evans Law Firm, Inc. at (415) 441-8669, or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. Our toll-free number is 1-888-50EVANS (888-503-8267). 

[1] Evans Law Firm, Inc. was not involved in the case in any way.

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