January 8, 2015 — Investors trust their lawyers to advise them honestly about important financial decisions. When instead, attorneys actually steal investment funds from those who rely on them, the whistleblower program established by the Dodd-Frank Wall Street Reform and Consumer Protection Act is there to help. Informants who notify the Securities and Exchange Commission (SEC) about Ponzi schemes that defraud investors may be rewarded for collaborating with the agency. Tipsters receive as much as thirty percent of the amount recouped by the government, provided that the total amount recovered is more than $1 million.
Manhattan Attorney Allegedly Cheated Clients, Friends and Family Members in $5 Million Ponzi Scheme
A New York lawyer has been charged with running a Ponzi scheme that victimized the man’s law clients, friends and family. Charles A. Bennett reportedly drummed up $5 million by peddling an alleged pool of funds that purportedly joint ventured with a Wyoming investment fund to which Bennett was supposed to have had connections. The investments would be used, Bennett allegedly promised, to purchase an interest in European mortgage-backed securities with impressive yields ranging from 6 to 25 percent, according to the SEC.
The investment was too good to be true. In reality, Bennett was unconnected to the fund and did not invest in it. To hide the scam, Bennett provided investors with sham account statements purportedly produced by the Wyoming fund. Meanwhile, Bennett allegedly used his investors’ money to fund luxury vacations and his own cash withdrawals. Investments from more recent investors went to make “interest” payments to those who had invested previously.
When the scheme began to crumble in 2014, Bennett drafted a handwritten confession which he left in a hotel room in Manhattan. After jumping into the Hudson River, Bennett was rescued.
The SEC is seeking financial penalties as well as disgorgement of ill-gotten gains.
Whistleblowers Alert SEC to Illegal Ponzi Schemes
While Waters & Kraus is not handling this particular example of securities fraud, we are representing whistleblowers in similar qui tam matters. If you have comparable claims against your employer, lawyer or anyone else engaged in an illegal Ponzi scheme, contact us by email or call our qui tam attorneys at 855.784.0268 to learn more about our practice and how we can work together to notify the government about SEC fraud and abuse. Our qui tam lawyers, such as Paul Lawrence in the firm’s Washington D.C. area office and Louisa Kirakosian in the California office, are committed to advancing and protecting informants’ interests in whistleblower lawsuits.