SEC Halts $16M Scam Aimed at Elderly Jehovah’s Witnesses

by RR 5 Replies latest watchtower scandals

• 

  RR

  SEC Halts $16M Scam Aimed at Elderly Jehovah’s Witnesses

  By Aaron Seward
  July 21, 2006

  The SEC has announced charges against a California-based corporation and its principals for a scam that defrauded the elderly. The Commission charges that Renaissance Asset Fund, Inc., Ronald J. Nadel, and Joseph M. Malone raised more than $16 million from more than 190 investors nationwide.

  In what the regulator called a classic Ponzi scheme, Nadel and Malone solicited aged investors through Jehovah’s Witnesses congregations and used the proceeds to fund their lavish lifestyles.

  The SEC’s complaint, filed in a California federal court, charges Renaissance, Nadel and Malone with violating federal securities laws, violating broker-dealer registration provisions and seeks disgorgement of ill-gotten gains with prejudgment interest, and civil penalties, among other punishments.

  “Fraud against seniors and affinity groups is particularly egregious because it is perpetrated through abuse of trust. The filing of these actions reflects the Commission’s determination to protect seniors and other investors from securities fraud,” said SEC Enforcement Division Director Linda Chatman Thomsen.

  According to the complaint, Nadel and Malone sold promissory notes to investors between March 1999 and April 2004. The notes related to a variety of purported projects, including a general fund, an outlet mall, an international currency exchange and a Swiss bank. Some of these projects did not exist, and others were unsuccessful.

  Regardless of that, Nadel and Malone told investors that their investments would earn returns ranging from 10% to 25% in as little as four months. They also sent false quarterly account statements to investors, outlining the fictional profits their investments had earned.

  Renaissance invested approximately $1 million of the funds it raised in business projects, but Nadel spent most of the investors’ money himself. As investors started wanting their money back, Nadel engaged in a series of stalling tactics, including soliciting rollovers of profits and principal into other Renaissance programs and making partial repayments from funds contributed by other investors.

  Approximately $1.5 million to $2 million was paid out to investors using funds deposited by other investors. In typical Ponzi scheme fashion, payments to existing investors were funded almost completely by money received from new investors to the scheme.

  Nadel also diverted approximately $2.3 million in investor funds to himself directly and through nominee accounts, and paid Malone at least $230,000. Nadel used the money to fund unrelated businesses, as well as for personal expenses, such as leases on cars, country club memberships and other retail purchases and services.

  As with all Ponzi schemes, once the flow of new investors stopped, the house of cards built by Nadel and Renaissance collapsed and most investors were left empty-handed.

  At the same time that these actions were filed, the SEC settled cease-and-desist proceedings against the scheme’s coconspirators, Senior Resources Asset Fund, LLC and Kenneth E. Baum. Baum acted through Senior Resources, a California company that provides financial advice to seniors, to sell Renaissance’s bogus promissory notes to elderly investors. Both Baum and Senior Resources consented to cease-and-desist from selling unregistered securities and from acting as an unregistered broker-dealer.

  The SEC announced the charges on July 17th, the same day the regulator convened its first ever Seniors Summit, a conference examining how to better protect older Americans from investment fraud and abusive sales practices.

  http://www1.cchwallstreet.com/ws-portal/content/news/container.jsp?fn=07-21-06
• 

  Confession

  So the big question to me: Were these two JWs themselves?

  I'm betting "yes."
• 

  fullofdoubtnow

  So the big question to me: Were these two JWs themselves?

  I'm betting "yes"

  That was my thought. You would think they would have to have had access to congregation info to know who to target. I wonder if they are "repentant" now.
• 

  95stormfront

  When it's one JW screwing over another financially, you don't have to worry about being repentant....especially if you're in differing congregations. but, if you try screwing over the WT........wellll.......now that's another story altogether.
• 

  Elsewhere

  Ponzi scheme

  What's scary is that the entire Social Security System is nothing more than a massive Ponzi scheme. The current generation funds the retirement of the previous generations.
• 

  bendover

  Ron Nadel, Kelly Konzelman started Renaissance Asset Fund in the late '90's. At it's zenith it employed dozens of witnesses from local congregations and dozens more of financial advisors who fairly systematically recruited investors from the congregations and others. Like all Ponzi schemes it did great as long as the money poured in. However, as the SEC filing states Nadel used the company as his own personal piggy bank. He later brought on Joe Malone, Steve Swanson (presiding overseer in Santa Monica congregation) Greg Gentile (presiding overseer Dana Point congregation) Tom Ingle and Phil Ingle (elders in San Juan Capistrano West congregation and Capistrano Beach congregation) Alan Long (secretary, Capistrano Beach congregation) and many many other elders. The problem was that Nadel preyed on the congregation using the basic tenants of Affinity Fraud, he and his fellow elders at R.A.F. would exploit their position as elders and the trust placed in them as elders to reassure potential investors that their money was safe. When R.A.F. folded everyone ran for cover and have since then pretended that they never worked at R.A.F. Nadel has practiced this sort of business strategy for years, build up a business that is all hype, exploit brothers who are taken in by his charisma, charm and b.s. and then when the reality of economics sets in he folds the business, rope-a-dopes brothers who try to hold him accountable for his actions and then moves to another area in Southern California and in a few years starts another company. Nadel is by definition a con-man. He uses the inherent trust of the flock in their shepards to gain the confidence of potential investors. He also uses the network of congregations and exploits as his own personal contact list for new investors. And of course financial crimes are very, very difficult to pursue within the framework of the congregation judicial arrangement and so he has never been held accountable for his actions within the congregation. It will take the resouces of the Government, including supoena powers, to get a handle on Nadel and those other elders who misused their position to assist Nadel in his scheme as they profited as well.