Investing.com -- The Securities and Exchange Commission (SEC) has announced charges against three residents of Dallas-Fort Worth, Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner, for allegedly running a Ponzi scheme that collected at least $91 million from over 200 investors.
The SEC complaint states that Alexander and Welsh operated this scheme through a trust controlled by Alexander, named Vanguard Holdings Group Irrevocable Trust (VHG), from around May 2021 until February 2024. They reportedly misled investors with promises of 12 guaranteed monthly payments of 3% to 6%, with the principal investment to be returned after 14 months.
The SEC claims that the two presented VHG as a highly lucrative international bond trading business with billions in assets, and assured investors that the monthly returns were generated from international bond trading and related activities. It is also alleged that Conner directed more than $46 million in investor money to VHG through a related investment program he managed using Benchmark Capital Holdings Irrevocable Trust (Benchmark), which was under his control.
The complaint further alleges that Alexander, Welsh, and Conner offered investors a supposed financial instrument they referred to as a “pay order” to safeguard their investments from the risk of loss. However, the SEC asserts that VHG had no significant source of income, the promised monthly returns were actually Ponzi payments, and the protection offered by the “pay orders” was non-existent.
The complaint also alleges that Alexander and Conner misused millions in investor funds for personal expenses, including Conner’s purchase of a $5 million home.
Sam Waldon, Acting Director of the SEC’s Division of Enforcement, stated that the defendants allegedly ran a large-scale Ponzi scheme that led to significant losses for investor victims, while Alexander and Conner misused millions of dollars of investor funds.
The SEC 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 is seeking permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against each of the defendants.
The investigation was carried out by Catherine Rowsey, Tamara McCreary, and Carol Hahn, and was overseen 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.
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