Federal securities regulators have charged three Dallas-Fort Worth area residents with orchestrating a $91 million Ponzi scheme that defrauded more than 200 investors over nearly three years.

The Securities and Exchange Commission (SEC) filed a civil complaint in the Eastern District of Texas on Tuesday against Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner, alleging they promised investors guaranteed high monthly returns from a purported international bond trading business that, in reality, did not exist.

SEC Alleges $91 Million Fraud, Homes and Luxury Items Seized

According to the SEC’s complaint, Alexander and Welsh controlled a trust called Vanguard Holdings Group Irrevocable Trust (VHG) and promoted an investment program that claimed to deliver 12 monthly payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term of 3% to 6%, with the original principal returned after 14 months.

The pair told investors that VHG was a highly profitable enterprise with billions in assets, generating returns through international bond trading. In truth, the SEC alleges, VHG had no substantial revenue and used new investor funds to pay earlier participants-a classic hallmark of a Ponzi scheme.

“The defendants conducted a large-scale Ponzi scheme Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and Read this Term 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 statement. “We remain unwavering in our commitment to hold individuals accountable for defrauding investors.”

The SEC further alleges that Conner, acting as trustee of Benchmark Capital Holdings Irrevocable Trust (Benchmark), funneled more than $46 million in investor money to VHG through a similar investment program. Benchmark offered even higher promised returns, and Conner is accused of misappropriating millions for personal use, including the purchase of a $5 million home.

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“Pay Order”

To entice investors and allay concerns about risk, Alexander, Welsh, and Conner marketed a so-called “pay order”—a purported financial instrument that allegedly protected investments from loss. The SEC asserts these protections were fictitious, with no evidence of actual pay orders being purchased or honored. Bank records show no transactions with the European banks supposedly backing these instruments, and when an investor attempted to redeem a pay order, the issuing bank refused payment.

The complaint details how the defendants used investor funds not only to pay returns to earlier investors, but also to settle lawsuits from victims of a prior advance-fee scheme. As the flow of new investments slowed in early 2023, the scheme began to unravel, with payments to most investors ceasing and the defendants providing false excuses for the delays.

The SEC’s filing seeks permanent injunctions, disgorgement of ill-gotten gains with interest, and civil penalties against all three men. The agency also wants to bar the defendants from participating in future securities offerings.