SEC Charges Three Texans with Operating a $91 Million Ponzi Scheme
Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26301 / May 2, 2025
Securities and Exchange Commission v. Kenneth W. Alexander II, et al., No. 4:25-cv-00446 (E.D. Tex. filed Apr. 29, 2025)
On April 29, 2025, the Securities and Exchange Commission (SEC) charged Dallas-Fort Worth residents Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner for operating a Ponzi scheme that raised at least $91 million from more than 200 investors.
Details of the Ponzi Scheme
According to the SEC’s complaint, between approximately May 2021 and February 2024, Alexander and Welsh operated the scheme through a trust controlled by Alexander called Vanguard Holdings Group Irrevocable Trust (VHG). They falsely represented that investors would receive 12 guaranteed monthly payments of between 3% and 6% per month, with the principal investment to be returned after 14 months.
The SEC alleges that Alexander and Welsh held VHG out as a highly profitable international bond trading business with billions in assets, claiming that the monthly returns were generated from international bond trading and related activities. As alleged, Conner funneled over $46 million in investor money to VHG through a related investment program that he operated using Benchmark Capital Holdings Irrevocable Trust (Benchmark), which he controlled.
Illusory Protections and Misappropriation of Funds
According to the complaint, Alexander, Welsh, and Conner also offered investors the option to protect their investments from risk of loss through the purchase of a purported financial instrument called a “pay order”. In reality, as the SEC alleges, VHG had no material source of revenue, the purported monthly returns were actually Ponzi payments, and the protection offered by the “pay orders” was illusory.
Furthermore, Alexander and Conner misappropriated millions in investor funds for personal use, including Conner’s purchase of a $5 million home, according to the complaint.
Legal Actions and SEC’s Allegations
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Texas, charges Alexander, Welsh, and Conner with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, along with Rule 10b-5. The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties against each of the defendants.
Investigation Details
The investigation was conducted by Catherine Rowsey, Tamara McCreary, and Carol Hahn and was supervised by Nikolay Vydashenko and B. David Fraser of the SEC’s Fort Worth Regional Office. The litigation will be led by Jason Rose and supervised by Keefe Bernstein.
