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Investors Accuse Firms of Running $66M Scheme

DAYTON, Ohio (CN) - A class of consumers say two investment firms defrauded them by running a $66 million Ponzi scheme with a man accused of mail and wire fraud.

The investors claim Kingdom Trust Co. and Pensco Trust Co. conspired with William Apostelos and sold unregistered securities related to real estate and short-term loans. Last year, Apostelos was charged by a federal grand jury with mail and wire fraud.

Apostelos - who is not named as a defendant in the case - allegedly convinced investors to transfer their IRAs to Kingdom Trust and Pensco Trust.

He then "would either have the plaintiffs request the defendants purchase unregistered securities using IRA assets or Apostelos would have the plaintiffs execute powers of attorney giving him (or one of his associates) the ability to request the defendants purchase unregistered securities using the IRA assets," according to a Jan. 7 lawsuit.

Cynthia Boyd and Thomas Flanders, the lead plaintiffs in the case, say Kingdom Trust and Pensco Trust used their control of the IRAs to purchase unregistered securities in the amounts of $400,000 and $497,000, respectively.

The lawsuit says the securities are worthless because they were not registered with the State of Ohio.

An article from the Dayton Daily News says Boyd is a former factory worker and Flanders is a former law enforcement officer.

In the same story, Toby Henderson, attorney for the plaintiffs, said, "These are both folks who were working class, blue collar. It certainly has been devastating for both of them."

Boyd and Flanders' lawsuit says Apostelos ran the Ponzi scheme from 2010 to 2014.

"During that time period, Apostelos, individually and through his various companies, raised at least $66.7 million from at least 350 investors," the complaint states. "Apostelos portrayed himself as a sophisticated investor and businessman, and he exploited his network of clients, business associates, and friends to attract new investors."

Boyd and Flanders seek class action certification and compensatory damages for the alleged illegal sale of securities. Their attorney, Henderson, is with the law firm Sebaly, Shillito and Dyer in Dayton.

Kingdom Trust is located in Murray, Ky., while Pensco Trust operates out of San Francisco.

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