A New York investment adviser named Ruless Pierre allegedly operated a Ponzi scheme that unlawfully obtained more than $2 million from investors who were told they'd see returns of 20% every two months.
Part of the scheme, known as the Amongst Friends Investment Group, involved the sale of partnership interests in a fast food chain franchise.
Amongst Friends Investment Group raised over $2 million from at least 100 investors, most of whom were Pierre's family, friends and acquaintances.
The SEC said Pierre targeted New York's Haitian community with his scheme.
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The US Securities and Exchange Commission alleges that Pierre promised investors returns on the franchise of 10% a month that were not at all possible to achieve.
In the franchise scheme alone, Pierre raised US $375,000. He did actually purchase a fast food franchise for $50,000 but shortly after the purchase he started to misappropriate funds that could have potentially been returned to investors by inflating the amount owed to the franchise's soda machine vendor.
Amongst Friends Investment Group investors purchased high-yield promissory notes and were promised 20% every 60 days.
In reality, Amongst Friends Investment Group incurred heavy losses trading securities and concealed those losses by using new investor funds to pay old investors and issuing false account statements showing investment gains.
On top of that, Pierre financed the fraud by using money that he embezzled from a former employer to make interest payments to investors.
"We allege that Pierre's Amongst Friends investment opportunity that targeted members of Pierre's local Haitian community was built on a foundation of lies and deceit," director of the SEC's New York office Marc Berger said.
"Investors should be wary of investments promising rates of return that seem too good to be true, and are encouraged to ask questions and check on their investment professional's background."
Pierre is now facing anti-fraud charges and criminal charges following an investigation by the SEC.