SEC Brings Charges Related to Ohio-Based Petroleum Ponzi Scheme
From the Desk of Jim Eccleston at Eccleston Law Offices:
Several Ohio residents were charged by the SEC with defrauding nearly $21 million from approximately 50 people in a Ponzi scheme.
Thomas Abdallah and Kenneth Grant set up a fake company, KGTA Petroleum, which supposedly bought and sold oil and fuel. They told investors that they would use funds to buy fuel at a discount,and then sell it for a substantial profit, thenpromised investors 2 to 4 percent returns each month and no market risk. They also promised that the funds and returns would flow to an escrow account. In reality, the person in charge of the escrow account never followed escrow procedure.
From Oct.8 2012 to February 2014, KGTA raised $20.73 million from investors, and used some funds to pay fake “returns” to investors. Abdallah and Grant also used funds for personal expense.
Moreover, two registered brokers, Jeffrey Gainer and Jerry Cicolani, solicited investors and facilitated the Ponzi scheme. They sold KGTA notes on their own and kept the transaction secret from their employer.
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