SEC Busts Giant Ponzi Scheme


Ponzi schemes seem to be basically affinity scams, built off of ethnic solidarity. Maybe investors should only trust people who aren’t their co-ethnics. We could call it “ethnic investment diversification.”

Or maybe it’s a Florida thing. Even Dick Fuld had a place in the Sunshine State. Should the rule be “don’t invest with anyone who pals around in Florida?’

From the Reuters:

U.S. securities regulators obtained an emergency court order to stop an alleged Ponzi scheme that collected more than $23 million from thousands of investors in Florida’s Haitian-American community, the Securities and Exchange Commission said on Tuesday.

The SEC alleged that Creative Capital and its principal, George Theodule, launched a scheme as early as November 2007 urging investors to form investment clubs to funnel funds to Theodule and Creative Capital.

The SEC alleged Theodule has lost at least $18 million trading stocks and options over the last year and that Creative Capital repaid early investors with money from later investors. Theodule combined investor funds with his personal funds and misappropriated at least $3.8 million for himself and his family, the SEC alleged.