SEC Charges in Ponzi Scheme
The Securities and Exchange Commission (SEC) has brought charges against Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner for running a Ponzi scheme that defrauded over 200 investors out of at least $91 million.
Scheme Overview
The scheme operated from May 2021 to February 2024 via the Vanguard Holdings Group Irrevocable Trust, claiming to generate high monthly returns from international bond trading while actually making Ponzi payments. Conner funneled over $46 million into the trust through a related investment called Benchmark Capital Holdings Irrevocable Trust.
Allegations and Misappropriation
The defendants allegedly misappropriated millions for personal use, including luxury purchases such as a $5 million home. The SEC seeks injunctive relief, recovery of ill-gotten gains, and civil penalties against all three defendants.
“As we allege, the defendants conducted a large-scale Ponzi scheme that caused devastating losses to investor victims, while Alexander and Conner misappropriated millions of dollars of investor funds,” said Sam Waldon, Acting Director of the SEC’s Division of Enforcement.
Legal Proceedings and SEC’s Commitment
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Texas, charges Alexander, Welsh, and Conner with violating the antifraud and registration provisions of the federal securities laws. The SEC seeks:
- Permanent injunctive relief
- Disgorgement of ill-gotten gains with prejudgment interest
- Civil penalties against each of the defendants
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.
This case underscores the SEC’s commitment to fight investment fraud and protect investors.
