High-Flying ‘Wealth Manager’ Falls to Earth

CHICAGO (CN) - Federal prosecutors say a suburban man duped more than 150 people in a $5 million Ponzi scam he ran through his insurance and investment business, Harbor Wealth Management. Scott Ross used his suckers' money to pay himself a $319,000 salary, to buy a $75,000-per-year skybox to watch the Indianapolis Colts, and to make Ponzi payments to a few investors, according to the criminal information.

Scott M. Ross, 42, of Woodstock, faces three counts of mail fraud. He ran his business out of Schaumburg, with two branch offices. From 2006 through January 2009, he used his business to push three investment funds: the Elucido Fund, the Moondoggie Fund and the Maize Fund.

He raised $1.92 million from 25 clients for the Elucido Fund, which he promised to invest in life settlement contracts, while falsely guaranteeing up to 34 percent returns, according to the information.

He raked in more than $3 million from 134 investors in Moondoggie Technologies, the complaint states. Ross told his suckers that his fund bought Moondoggie shares at a discounted price of $1.75, though he actually paid only $1 per share, prosecutors say.

Ross falsely promised "that Moondoggie Technologies agreed to buy back the Moondoggie shares purchased by the fund for $3.75 per share in 30 months and later for $5 per share in 36 months," though actually, "Moondoggie Technologies never agreed to repurchase any of its shares at any price," according to the information.

According to the criminal information: "(T)he defendant misappropriated all of the funds invested in the Elucido Fund to, among other things, pay expenses of the Maize Fund, make Ponzi-type payments to repay investors in the Moondoggie Fund and benefit himself, including the purchase of a $75,000-per-year sky box at the football stadium of the Indianapolis Colts and the payment of a $319,000 salary to himself."

If convicted, Ross faces up to 20 years in prison and a $250,000 fine for each count.

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