BROOKLYN, N.Y. (CN) - An investment scam swindled blue-collar retirees out of nearly $12 million, the SEC says. Endeavor Capital and Endeavor Partners gained old folks' trust at free lunches that were sales pitches disguised as educational workshops, according to the federal complaint.
Defendant Charles Slowey, who owns Endeavor, claimed that the funds' value "was 433 percent of the capital invested" and that his business was earning "50.6 percent return on the sale of four properties," according to the complaint.
This was nonsense, the SEC says - "grossly inflated and false" - none of the four properties had been sold for a 50 percent return.
Slowey, 65, of Oak Beach, N.Y., conned 90 investors, many of whom had retired from factories, restaurants or teaching, and the retirement money he took made up "an unreasonably large percentage of their retirement savings or net worth," the SEC says.
Slowey "investments" were unregistered securities, for which he did not provide basic disclosures, audited balance sheets and other mandated protections, the SEC says.
Slowey continued to lie as the funds fell apart, telling one old shareholder that his money was safe, and another one that the funds would regain their value, though the funds "had little money left," the SEC says.
He persuaded investors to reinvest their maturing interest instead of taking dividends, "even though he knew that the funds had lost substantial sums of money and owned only a handful of properties worth far less than the $10 million initially deposited by investors," according to the complaint.
Slowey charged his victims $100,000 for his management fees, paid brokers more than $120,000 in commissions and borrowed $300,000 as an interest-free loan to buy himself a million-dollar home, the SEC adds.
The agency also sued three brokers who allegedly sold Endeavor funds through Advanced Planning Securities and Oldham Harris. Had brokers Edward Puttick, Gregory Oldham and Glenn Harris done due diligence, they would have found that Slowey was an unsuccessful businessman with a history of financial problems, including personal and professional bankruptcy, the SEC says.
The SEC seeks disgorgement of ill-gotten gains and an injunction.
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