$91M Ponzi scheme run by Dallas-Fort Worth residents scammed investors, SEC says
The U.S. Securities and Exchange Commission has filed civil charges against three Dallas-Fort Worth residents, accusing them of operating a $91 million Ponzi scheme that defrauded more than 200 investors.
The SEC complaint, filed April 29 in U.S. District Court for the Eastern District of Texas, charges Kenneth W. Alexander II, of Fort Worth; Robert D. Welsh, of Frisco; and Caedrynn E. Conner, of Heath, with violating antifraud and registration provisions of federal securities laws.
“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, in a news release this week.
The defendants used investors’ money for personal purchases, including Conner’s $5 million home, the complaint says. The SEC is seeking civil penalties against the defendants and repayment of “ill-gotten gains with prejudgment interest,” according to the release.
Alexander and Welsh ran the scam through a trust called Vanguard Holdings Group Irrevocable Trust, which they claimed was a highly profitable international bond trading business, between about May 20221 and February 2024, according to the SEC complaint. The defendants falsely told investors they would receive 12 guaranteed monthly payments of between 3% and 6% and that their principal investment would be returned after 14 months, the complaint states.
According to the SEC, the trust had no source of revenue and the monthly returns were Ponzi payments.
Conner is accused of funneling over $46 million in investors’ money to VHG through a related investment program that he controlled.
The three defendants also falsely told victims of the scheme that they could protect their investments from risk of loss by buying something they called a “pay order,” according to the complaint.
