Washington, D.C., Dec. 30, 2008 — The Securities and Exchange Commission has
obtained an emergency court order to halt an alleged Ponzi scheme and
affinity fraud that collected more than $23 million from thousands of
investors in the Haitian-American community nationwide through a network of
purported investment clubs. Additional Materials Litigation Release No.
20840 SEC Complaint
The SEC alleges that Creative Capital Consortium LLC and A Creative Capital
Concept$, LLC (collectively, Creative Capital) and its principal, George L.
Theodule, began conducting the scheme as early as November 2007 by urging
investors to form investment clubs to funnel funds to Theodule and Creative
Capital. Theodule solicited investors by guaranteeing a 100 percent return
on their investment within 90 days based on his claimed successful trading
of stocks and options. According to the SEC's complaint, investors also were
promised that Creative Capital's trading profits were being used to fund new
business ventures, including some to benefit the Haitian community in the
U.S., Haiti, and Sierra Leone. The SEC alleges that Theodule has lost at
least $18 million trading stocks and options just over the last year, and
Creative Capital merely repaid earlier investors with monies collected from
new investors in typical Ponzi scheme fashion. The SEC also alleges that
Theodule has commingled investor funds with his personal funds and
misappropriated at least $3.8 million for himself and his family.
"This alleged Ponzi scheme preyed upon unsuspecting members of a close-knit
community, attempting to take advantage of the trust they had in each
other," said Linda Chatman Thomsen, Director of the SEC's Division of
Enforcement. "As always, investors need to be wary of investment
opportunities that guarantee results and tout extraordinary returns."
David Nelson, Director of the SEC's Miami Regional Office, added, "This case
demonstrates that individuals will often rely on a shared affinity to gain
investors' trust. In this case, Theodule allegedly abused that trust to con
thousands of investors in the Haitian-American community."
Judge Donald M. Middlebrooks, U.S. District Judge for the Southern District
of Florida, issued the order on December 29 placing Creative Capital under
the control of a receiver to safeguard assets, as well as other emergency
orders, including temporary restraining orders and asset freezes.
The SEC's complaint further alleges:
- Defendants' statements of the safety
and security of investor deposits are patently false. Theodule directs
prospective investors to form investment clubs with the assistance of a
purported self-regulatory agency called Smart Investment Management
Services, LLC (SIMS).
- Defendants tout SIMS' independent verification of
their deposits as an added measure of safety and security. In reality, SIMS
is a private company run by a former Creative Capital employee and not a
regulatory entity.
- Defendants' claim of success trading stocks and options
are also false. Of the more than $18 million deposited in brokerage
accounts, Theodule has lost approximately 97 percent of those funds trading
stocks and options. In fact, Theodule has consistently lost money trading in
those accounts since November 2007, and has never generated net trading
profits. Defendants' claims that Creative Capital's trading profits were
used to fund new business ventures, some of which would benefit the Haitian
community in the United States and Haiti, and others in Sierra Leone are
false. In reality, there were no trading profits, and most of the funds the
defendants disbursed went to pay earlier investors their purported profits,
not fund business projects. Moreover, the defendants misappropriated
millions of dollars of investor funds.
In addition to the emergency relief obtained, the SEC's complaint seeks
disgorgement of the defendants' ill-gotten gains, financial penalties, and
permanent injunctions barring future violations of the antifraud provisions
of the federal securities laws.
The Commission acknowledges the assistance of the State of Florida's Office
of Financial Regulation in connection with this matter.
The SEC's investigation is continuing.
For more information, contact:
David Nelson Regional Director, SEC's Miami Regional Office (305) 982-6332
Glenn S. Gordon Associate Regional Director (Enforcement), SEC's Miami
Regional Office (305) 982-6360
Teresa J. Verges Assistant Regional Director (Enforcement), SEC's Miami
Regional Office (305) 982-6384
http://www.sec.gov/news/press/2008/2008-306.htm
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