Affinity Fraud Cases In New York And California Fleece Investors Of $35 Million, SEC Says; Ordained Minister Charged In New York Scheme Targeting Elderly Parishioners
Eight people have been charged in unrelated affinity-fraud cases in New York and California that bilked investors out of $35 million, the SEC said.
In the New York case, seven members of a Queens church were charged, including a minister. The scheme targeted “mostly elderly” members of the church, fleecing them of $12 million, the SEC said.
The California case resulted in charges against a woman who coupled affinity fraud with a Ponzi scheme to fleece investors of $23 million, the SEC said. The scheme targeted members of the Hispanic-American community.
Charged in New York were Isaac I. Ovid, 28, an ordained minister in the church and a citizen and resident of Trinidad & Tobago; Aaron Riddle, 34, of Narvon, Pa.; Bob Riddle, 59, the father of Aaron Riddle and a resident of New Holland, Pa.; J. Jonathan Coleman, 40, of Astoria, N.Y.; Stephen Cina, 32, of Westbury, N.Y.; Cory A. Martin, 31,of Westbury, N.Y.; and Timothy Smith, 35, of Ephrata, Pa.
Also charged in New York were Jadis Capital Inc., Jadis Investments LLC and Logos Multi-Strategy Hedge Fund I LP.
Charged in California were Clelia A. Flores and Maximum Return Investments Inc. (MRI) of El Segundo.
â€œAs we allege in our complaint, Flores violated the trust of her own community by falsely promising high returns and no risk,â€ said Rosalind R. Tyson, director of the SECâ€™s Los Angeles Regional Office. â€œWhen she couldnâ€™t deliver, she resorted to paying off early investors with money from unsuspecting newcomers.â€
Flores misappropriated investors’ funds to pay her personal expenses “and finance a lavish party for MRI to celebrate the companyâ€™s alleged financial success,â€ the SEC said. About 150 investors from seven states were affected by the scheme, which began in late 2006.
Meanwhile, the defendants in the New York case bought expensive watches and a luxury Bentley automobile with investor funds, the SEC said.
Robert Khuzami, director of the SECâ€™s Division of Enforcement, didn’t mince words when describing the New York scheme.
â€œAffinity fraud is a particularly sinister scam that exploits investors in close-knit communities,â€ he said. â€œThe SEC has recently brought enforcement actions against fraudsters who have deceived members of the deaf community, religious groups, and various minority groups. Todayâ€™s action is especially egregious, as church leaders targeted their own parishioners and betrayed the sincere trust placed in them.â€