The
Securities and Exchange Commission (SEC) has secured nearly $4
million from the widow of a deceased investment adviser who ran a Ponzi
scheme that defrauded more than 50 investors out of $29 million over an
11-year period. The scam was so effective that it continued to operate for a
while even after its creator’s death.
SEC Collects $3.8M from
Widow in Ponzi Scheme Settlement
Wendy
Swensen agreed to pay $3.8 million in
a settlement reached July 31, marking the conclusion of a case involving
her late husband Stephen Swensen’s fraudulent investment operation. The
money will go directly to harmed investors through a court-appointed
receiver.
Stephen
Swensen died in June 2022 while the SEC’s investigation was ongoing. He had
promised investors guaranteed annual returns of at least 5% through his
company Crew Capital Group, telling clients their money would be invested in
bank loans and options tied to the S&P 500 index.
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The Fraudulent Scheme
Unraveled
None of
that was true. Instead, Swensen used incoming investor funds to pay
fictitious returns to earlier investors while spending the bulk of the
money on personal expenses, including real estate, vehicles, and multiple
private aircraft. Unfortunately, this
practice occurs far more often than we would like.
“According to the complaint, however, Mr. Swensen misappropriated investor funds to make Ponzi-like payments to other investors and to pay for his, and his family’s, personal expenses. The SEC did not allege wrongdoing by Ms. Swensen,” the SEC commented in the statement.
The scheme
ran from 2011 until Swensen’s death. He operated under the guise of being a
registered investment adviser representative, working with several legitimate
brokerage firms during the period. This gave him access to clients
seeking retirement planning advice, whom he then steered toward his
fraudulent investment.
This is
another example of an elaborate Ponzi scheme uncovered by the SEC, which
defrauded a large group of investors out of millions of dollars. A few months
ago, Finance
Magnates reported on a similar case in which 200 people were promised high
returns and risk-free investments.
Elaborate Deception Fooled
Investors
Swensen
went to elaborate lengths to make Crew Capital appear legitimate. He
created fake documentation showing a partnership with Pacific Investment
Management Company (PIMCO), one of the world’s largest
investment firms. PIMCO never had any relationship with Swensen or his
company.
He also
maintained a professional-looking website where investors could log in to view
their account balances and supposed returns. The numbers displayed were
entirely fictitious, but they convinced several victims to invest
additional money.
The
deception ran deep. Swensen used mail forwarding services to create
fake addresses in major cities like Boston, New York, and San Francisco.
He hired a virtual receptionist service and paid extra fees to keep
his name off public corporate filings in Nevada, where Crew Capital
was registered.
Widow Pays Back Ill-Gotten
Gains
Wendy
Swensen received more than $350,000 in investor funds directly from her
husband’s scheme, along with real property purchased with stolen money.
The SEC did not allege she knew about or participated in the fraud.
Under the
settlement, she must pay $3.6 million in disgorgement, plus $41,279 in
prejudgment interest and an additional $171,592 representing interest she
earned on investor funds during the litigation.
Swensen’s
clients trusted him to manage their retirement savings, only to discover
their nest eggs had been funding his lavish lifestyle.
Red Flags Investors Should
Watch
Court-appointed
receiver Chad Pehrson will distribute the recovered funds to victims. The SEC’s
investigation was led by staff from the Denver Regional Office and San
Francisco Regional Office.
Crew
Capital’s website remained active even after Swensen’s death,
continuing to display false account information to investors until the SEC
intervened. The company had no legitimate business operations beyond the
fraudulent fundraising efforts.
This case
serves as a reminder that guaranteed returns in investing are
typically too good to be true. Legitimate investments carry risk, and
promises of steady, guaranteed profits should raise immediate red flags
for potential investors.
This article was written by Damian Chmiel at www.financemagnates.com.
