Monday, September 25, 2023
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SEC Busts Another Alleged Ponzi Scheme

(CN) - A Long Island-based investor defrauded friends and acquaintances of more than $55 million in a 17-year Ponzi scheme, the SEC says in Federal Court. It claims Edward T. Stein, 59, victimized more than 80 people through his Gemini Fund I and DISP LLC, which he claimed invested in arbitrage and hedge funds but he actually used to dump money into a bankrupt fashion magazine and buy a condo in Manhattan.

In its complaint in Manhattan Federal Court, the SEC says Stein gave investors bogus statements while he used their money to pay off earlier investors, pay personal expenses, and fund a failed magazine.

The SEC says Stein began marketing Gemini in 1992 as a feeder fund to other entities that did in arbitrage and hedge trading, but he actually put Gemini money into the failing Detour Media Group. Detour filed for bankruptcy in 2003 but Stein continued to solicit investments and produce false statements, according to the complaint.

The SEC says Stein set up DISP in 2002, allegedly to invest in life settlement policies. But it says DISP has not bought any policies since 2004, and Stein transferred its portfolio to another entity he controlled, without telling investors. He also allegedly used DISP investor funds to pay off Gemini investors.

"Stein's records are in disarray and he has produced no evidence to date that

any of the funds he collected from investors are currently invested," the complaint states. Also named as defendants are Edward T. Stein Associates Ltd., Prima Capital Management, Vibrant Capital Corp., and Vibrant Capital Funding.

A federal judge granted the SEC's request to freeze Stein's assets.

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