The Securities and Exchange Commission (SEC) has filed an emergency action to halt an alleged $50 million Ponzi scheme.  The scheme was allegedly conducted by Joseph S. Forte of Broomall, Pennsylvania, and his company, Joseph Forte, LP.  According to the complaint, from at least February 1995 to the present, Forte has raised approximately $50 million from about 80 investors through the sale of securities and limited partnerships in Forte LP. 

As with all scams, the central allegation against Forte - who has never been registered to sell securities - is that he made misrepresentations to investors.  According to the SEC, Forte told investors that he would invest the limited partnership funds in a securities futures trading account.  But, according to the complaint, this never happened, and neither did the impressive returns that Forte reported to investors.  Instead, Forte admitted that he falsified the trading performance from the very first quarter, and that instead of the 18.52%- 37.96% returns the he reported, Forte actually lost approximately $3.3 million. 

The complaint further alleges that Forte misrepresented what he actually did with the investor money.  Of the $50 million that he raised to supposedly participate in trading programs, he deposited only half.  Not to mention that $23.1 million of the $25.8 million that he did deposit, he withdrew in the same period.   

But it doesn’t stop there.  According to the complaint, Forte allegedly admitted to taking at least $10-$12 million in “investor fees” for personal use based on the fraudulently inflated value of Forte LP.  According to the statements, though, he actually took over 50% for personal use.   

And lastly, the complaint states that Forte used approximately $15 to $20 million in investor funds to repay earlier investors.  Have we heard that before? 

Notice how long Forte was able to operate.  While Bernie Madoff makes any scheme of less than two decades look second-class, a 14-year scam would have been near the record before Madoff - the Michael Phelps of scam artists - set a record that (God willing) will never be broken.

While Ponzi schemes are falling from the sky, it doesn’t have to affect you.  Investigate your broker before you invest.  It’s as simple as that.  Ask a former SEC Enforcement Branch Chief for a safety rating - it comes with peace of mind.

This entry was posted on Thursday, January 15th, 2009 at 7:38 am and is filed under Investors at Risk, Investor Protection, Pennsylvania, SEC, Ponzi schemes, Securities Industry (general), Scams, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.