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Dallas-Fort Worth Residents Accused of Orchestrating $91 million Investment Scam
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Three individuals are facing charges from the SEC for allegedly running a Ponzi scheme that defrauded over 200 investors.
the United States Securities and Exchange Commission (SEC) has brought charges against three residents of the Dallas-Fort Worth area, alleging thay operated a $91 million Ponzi scheme that defrauded more than 200 victims.The SEC filed its complaint in the Eastern District of Texas, Sherman Division, on April 29.
Kenneth W. Alexander II, Robert D. Welsh,and Caedrynn E. Conner are accused of defrauding investors through a trust controlled by Alexander, known as Vanguard Holdings Irrevocable Trust Group.
According to the SEC, the alleged scheme ran from May 2021 to February 2024, under the guise of the “vanguard JV Cash program.”
Details of the Alleged ponzi Scheme
The SEC alleges that Alexander and Welsh presented Vanguard Holdings Group (VHG) as an international bond trading firm with billions in assets. They reportedly told investors that their funds would be used for bond market operations, promising returns of 3% to 6% monthly over a 14-month period, along with the return of the initial investment.
“The defendants carried out a large -scale Ponzi scheme that caused devastating losses to the investor victims.”
Though, the SEC claims that payments to investors were made using funds from new investors, rather than profits from bond trading. The agency also alleges that the “payment order” offered to protect investments was “illusory.”
Misappropriation of Funds
The SEC’s complaint states that approximately $1.1 million was paid to WELSH and Person Heath as compensation. Additionally, funds were allegedly used to pay victims of a previous loan scheme operated by Alexander and Welsh between 2019 and 2021.
In the earlier scheme, victims paid upfront commissions ranging from $500,000 to $10 million to Axiom Financial, an entity controlled by Alexander and Welsh, for promised credit lines. When the credit lines failed to materialize,five companies filed fraud lawsuits.
the SEC asserts that funds from the VHG scheme were used to settle these prior fraud claims.
The lawsuit also notes that both Welsh and Conner invoked their Fifth Amendment right against self-incrimination during the SEC’s examination.
SEC’s Stance
“As we claimed, the defendants carried out a large -scale Ponzi scheme that caused devastating losses to the investor victims, while Alexander and Conner embezzled millions of dollars of investor funds,” said Sam Waldon, interim director of the Division of Compliance with the SEC. “We hold our commitment to hold people firmly to disapprove of investors.”
Frequently Asked Questions
What is the SEC?
The SEC, or Securities and Exchange Commission, is an independent agency of the U.S. Federal Government that regulates the securities markets and protects investors.
What is a Ponzi scheme?
A Ponzi scheme is a fraudulent investment operation where the operator pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
what should I do if I think I’ve been targeted by a Ponzi scheme?
Contact the SEC or the FBI instantly and provide them with all the information you have about the scheme and the people involved.
