Ponzi Scheme Is A Family Thing, SEC Says

BUFFALO, N.Y. (CN) - Watermark Financial Services Group defrauded senior citizens of more than $5 million in a "convertible debentures" Ponzi scheme from which the defendants drained money for themselves, the SEC claims in Federal Court.

Guy Gane Jr. and Lorenzo Altadonna led the fraud in which they sold $5.7 million "in fraudulent, unregistered securities," $5.1 million of it "'convertible debentures' issued by Watermark Financial and Watermark Holdings," the commission claims.

The SEC claims the defendants bilked "approximately 90 unsophisticated investors," and took another $580,000 by selling promissory notes, promising 12% to 42% annual returns.

Gane and Altadonna ran the scam as a classic Ponzi scheme, the SEC says, and sent "a substantial portion of investor funds to Denkon, Inc., an entity located in Palm Beach Gardens, Florida, for no apparent consideration."

Gane Jr., 53, of Niagara Falls, and Altadonna, 33, of North Tonawanda, N.Y., are licensed securities brokers. Gane III is, 28, of North Tonawonda, is Gane's son, and Jenna Gane, 23, is his daughter.

Here are the defendants: Watermark Financial Services Group Inc., Watermark M-One Holdings Inc., M-One Financial Services LLC, Watermark Capital Group LLC, Guy Gane Jr., Lorenzo Altadonna, Guy Gane III, Jenna Gane, and Denkon Inc.

The SEC demands disgorgement and penalties.

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