September 29, 2009

SEC charges salesman in $250M Ponzi scheme

The Securities and Exchange Commission filed charges in Detroit alleging a $250 million Ponzi scheme had defrauded a mostly elderly investor pool.

The SEC charged salesman Frank Bluestein of scalping 800 investors of more than $74 million between 2002 and 2007.

As part of his sales strategy, Bluestein specifically targeted retirees and seniors, the SEC complaint says, The Detroit News reported Tuesday.

Bluestein worked at E-M Management LLC, selling investments related to telecommunications services at commercial businesses, like hotels and truck stops.

Bluestein's attorney David Foster said, the SEC has to demonstrate intent to defraud and knowledge of the Ponzi scheme. Mr. Bluestein had neither.

In a previous lawsuit, the SEC obtained a permanent injunction against E-M Management and its owner Edward May, the newspaper said. In total, 1,200 investors lost approximately $250 million, the SEC said.