SEC Charges Three Texas Men With $91 Million Ponzi Scheme

SEC Charges Three Texans with Defrauding Investors in $91 Million Ponzi Scheme

The Securities and Exchange Commission today announced charges against 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.

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, according to the complaint. The SEC alleges that Alexander and Welsh held VHG out as a highly profitable international bond trading business with billions in assets, and told investors that the monthly returns were generated from international bond trading and related activities. As alleged, Conner funneled more than $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. 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 they 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. Alexander and Conner misappropriated millions in investor funds for personal use, such as Conner’s purchase of a $5 million home, according to the complaint.

Trade-War Uncertainty Prompts Wave of Companies to Yank Forecasts

A new wave of major U.S. and European companies, including General Motors, JetBlue, Snap and Volvo, are warning that the trade war’s unknowable course and consequences make it futile to forecast future performance.

GM, JetBlue and Volvo all shelved earlier profit guidance for 2025 due to economic uncertainty. The shape-shifting nature of President Trump’s automotive duties have clouded the outlook, GM said, while JetBlue predicted that softer demand would plague the airline into the summer. Snapchat parent company Snap said it wouldn’t issue guidance like it normally does and warned the social-media platform could suffer from an advertising slump. UPS didn’t update its outlook, though it predicted lower shipping volumes and revenue for the second quarter. It also announced 20,000 workers would be laid off.

The First 100 Days: SEC Edition

With respect to crypto, a variety of actions have been taken:

– Commissioner Peirce is leading the SEC Crypto Task Force with mission of providing regulatory clarity for crypto assets.

The SEC has solicited feedback held several roundtables on crypto regulatory issues.

– SAB 121 was rescinded by SAB 122.

– The Staff has issued statements on meme coins, proof-of-work mining and stablecoins.

– The Staff issued a statement on offerings and registrations in the crypto asset market

– The SEC Enforcement Crypto Unit was disbanded and replaced by Cyber and Emerging Technologies Unit.

– Litigation has been dropped or stayed in various crypto-related cases.

On the SEC operations side of things, a significant portion of the SEC Staff has left or is in the process of leaving as a result of the DOGE “fork in the road” offer and the SEC’s early retirement program. Anecdotally, it appears that these staffing cuts have been disproportionately comprised of senior Staff members with significant experience and institutional knowledge. It is wild to think that all of this activity occurred before Chairman Paul Atkins was sworn in last week. Now that the SEC has a Chairman in place, I think that we can only expect this pace of change to continue.

Lingering COVID Effects Drive Securities Suit Against AVIS

It has now been over five years since the initial COVID-19 outbreak in the U.S. in March 2020, but the pandemic’s disruptive effects continue reverberate through the economy. In a newly filed securities lawsuit against auto rental company Avis Budget Group, investors claim that the company concealed an auto fleet-related business move that the company made because of earlier pandemic-caused supply chain disruptions. The new lawsuit’s allegations show how the pandemic’s lingering effects continue to influence companies’ decisions and actions – and lead to litigation….