ALBANY, N.Y. (CN) - An alleged banker ran a Ponzi scheme that bilked 400 investors of nearly $6 million by claiming to have close ties with European banks and money managers, the SEC claims. Christopher W. Bass was arrested in February on a related felony charge of making false representations to investors. Both the criminal case and the SEC's complaint were filed in Albany Federal Court.
Bass, 53, is sole shareholder, president and CEO of Swiss Capital Harbor-USA, which he formed in 2007. Three funds set up by Swiss Capital were also named as defendants.
Bass allegedly set up these businesses not long after he had been accused of looting his Swiss company, Revisco Finanz AG.
The Swiss Federal Banking Commission declared Revisco bankrupt and ordered its dissolution and liquidation, the SEC said. Bass tried unsuccessfully to have investors transfer their Revisco accounts to Swiss Capital, but the money had already been frozen by Swiss authorities, according to the SEC.
He moved to Albany from Switzerland in 2006 and began recruiting new investors, prosecutors said.
"Bass told investors that he would pool their money and have European money managers invest the funds in various enterprises in Europe, including currency trading accounts and mobile power plants powered by bio-fuel," according to the SEC complaint.
"Bass claimed that these managers historically had generated monthly returns ranging from approximately 2.8 percent to 6 percent. In fact, the returns claimed by Bass were fictitious, and most investor funds were not sent to Europe."
Most of the money invested in Swiss Capital entities paid for operating expenses, Bass's personal expenses, and satisfied some redemption requests, but Bass's securities were not registered, the SEC says.
After the Ponzi scheme collapsed in July 2009, Swiss Capital stopped honoring investors' requests for their money, according to the complaint.
"Bass thereafter falsely told investors that an 'audit' by the commission prevented defendants from paying redemptions," the complaint states. "In fact, the commission had not prevented redemptions. Rather, defendants could not pay redemptions because they had spent all the money and had no funds available with which to pay further redemptions."
The SEC says only $1.4 million of approximately $5.9 million Bass raised has been returned to investors. It seeks disgorgement and penalties.
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