Georgia Company Charged in $25M Ponzi Scheme

Source: The Atlanta Journal-Constitution

An Alpharetta-based financial firm has been charged by the Securities and Exchange Commission with operating a Ponzi scheme worth at least $25 million. According to the SEC, CRE Capital and its president, James G. Ossie, 48, wooed investors to a currency trading program last year by guaranteeing returns of 10 percent every 30 days, or a 120 percent annual rate. Some clients were promised 20 percent monthly gains, the SEC said. The Associated Press reported that Ossie lives in Dawsonville. The SEC said Thursday that the company’s trading has lost $12 million and that returns were paid with funds taken from later investors.

The SEC has obtained an emergency federal court order freezing the program’s assets and appointing a receiver to take over control of the company. The SEC’s investigation is ongoing. “The SEC’s emergency action in this case will protect investors from further harm,” said Katherine S. Addleman, director of the SEC’s Atlanta regional office. “We also want to remind investors to be skeptical of promoters promising exorbitant returns. Such claims should be red flags to investors.”

The scope pales in comparison to the massive, $50 billion Ponzi scheme allegedly orchestrated by New York money manager Bernard Madoff. Bill Leonard, an attorney for CRE and Ossie, said that Ossie “maintains that he acted with good faith at all times and intended to act with integrity for his clients.” He said that Ossie and CRE have been “cooperating fully” with the SEC, opening all records for review. The SEC said at least 120 investors signed up for the program. The agency did not name the investors, though it did say that CRE Capital and Ossie required that investors be business entities, not individuals.

CRE and Ossie told investors the trading program carried little risk because the company had created a large “defensive” reserve fund that would be able to cover the monthly returns. The SEC also has charged CRE and Ossie with falsely claiming that the program was audited by an outside accounting firm. The agency also says that CRE and Ossie told investors that the company planned on making a $100 million stock offering this year. According to the Georgia secretary of state, CRE Capital registered with the state in March 2007 and has offices on Mansell Road in Alpharetta. A news release issued last October announced that CRE had selected a California company to provide its customer relationship management software. The news release described CRE as a “distinctive, high-end private investment company offering a progressive and low-risk, high-yield opportunities to investors.”

Comments

[VBP]

How do these masterminds find the fortitude or the loopholes that trick people out of such large amounts of money?

VBP

[Jeff]

VBP,

I often wonder the same thing. In these Ponzi schemes, the fraudster preys on investors he/she has tricked into trusting them, even when unreasonable return rates are promised. The perpetrators of these crimes are basicly greedy and unethical. I wouldn't call them masterminds. Instead, they are foolish and shortsighted, since their schemes will almost always come crashing down on them in due time.

Thanks for your readership and your comments!

Jeff