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SEC Busts Alleged $10M Ponzi Scheme

HOUSTON (CN) - Texas businessman Albert Kaleta cheated 50 investors of $10 million by making bogus promises, the SEC says. Kaleta, 66, took $1.5 million off the top, paid $10,000 in month in credit card bills and bought himself a Mercedes rather than using the money as he promised Kaleta Capital Management would handle it, according to the federal complaint.

Kaleta, of Missouri City, Texas, claimed he would use investor's money to fund "credit-worthy" small-business loans, but he loaned nearly $7 million to insolvent affiliates, and spent $1.5 million on himself, the SEC says.

Kaleta loan millions to BizRadio and DFFS Capital Management, companies in which he had a controlling interest and that "had no prospect of paying them back," and used new money to pay off old investors - a classic Ponzi scheme, the SEC says.

Kaleta promised 10 percent returns and claimed he loaned investors' money on short terms for 12 to 14 percent interest.

But actually, "He used offering proceeds to pay more than $10,000 per month to cover credit bills for him and his family," the SEC says. "He also paid thousands of dollars to Mercedes-Benz for one or more automobiles."

The SEC seeks disgorgement and an injunction telling Kaleta not to do it again, ever.

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