Boston federal court enters judgement on alleged Ponzi scheme
In MA, other states, former Bostonian drew clients into investment scam, SEC charges
On March 28, a federal court in Boston entered a final judgment against a former Boston resident who allegedly ran a multi-million dollar Ponzi scheme-style scam in multiple states.
According to the U.S. Securities and Exchange Commission charges, between 2007 and 2015, Mark Anderson Jones allegedly solicited investors for a fund he said would provide loans to Jamaican businesses. Reportedly, the investments were to be for making “bridge loans” that would supply the firms while they awaited funding from approved commercial bank loans. Jones allegedly promised that these loans would yield 15 to 20 percent interest annually, and he provided the clients with promissory notes and personal guarantees in exchange for their investments.
However, authorities state that despite his promises, by November 2014 Jones was using much of the investment money to issue returns to other investors and for his own personal expenses. In a Ponzi scheme, the scammer promises investors high returns and low risk. Instead of investing the funds properly, the scammer pays returns to current investors with money taken from the investments of new backers. As such, the scheme requires a continual supply of new investors. According to Investopedia, red flags of a Ponzi scheme include the promise of guaranteed high returns with little risk, consistent delivery of returns regardless of the market conditions, investments that are not registered with the SEC, investment strategies that are not made transparent and often described as too complex to explain or as secret, clients not being allowed to see official paperwork for their investment and barriers to clients removing their money.
The SEC filed its complaint against Jones in March of last year. Formerly a Boston resident, by the time of his arrest by the FBI in 2016, Jones lived in Miami and owned a second home in Jamaica.
Retirees, relatives scammed
Among the investors in Jones’ so-called “Bridge Fund” were many retirees whom the SEC alleges lacked the sophisticated investing knowledge to protect themselves from his scheme and now face financial troubles because of their participation. Allegedly, Jones provided some investors with periodic account statements; others saw rolled over into their accounts what they were told was accrued interest. Jones even met with some investors in Jamaica to show them projects he claimed their investments funded. He also appeared in YouTube videos promoting investment opportunities in Jamiaca, states the complaint.
“We allege that Jones enticed investors with the idea that they were investing in loans to Jamaican businesses that already had been approved for bank loans. Instead, we charge that Jones used investor money for other purposes, including making payments in Ponzi scheme fashion,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office in an SEC press release.
Jones drew at least 21 investors from six states — including Massachusetts — and Washington, D.C., raising about $10 million, states the SEC. Allegedly, he also reaped more than $3.5 million in profit from his conduct. Three of Jones’ own relatives were among the investors. According to the SEC complaint, in 2015 Jones failed to make some interest payments and in July of the next year his attorney informed many investors that their money was not used as promised.
The court ordered Jones to give up the profit he had gained from his fund, with prejudgment interest of $236,463, and pay a civil penalty of $160,000. The court also permanently enjoined him from violating certain antifraud provisions.