(CN) - Seven leaders of a church in Queens, N.Y., defrauded elderly parishioners of more than $12 million by encouraging them to invest in hedge funds - then using the money to buy themselves a Bentley, jewelry and overseas trips, the SEC says in Brooklyn Federal Court.
The SEC sued Isaac I. Ovid, Aaron Riddle, J. Jonathan Coleman, Stephen Cina, Cory A. Martin, Timothy Smith, and Robert J. Riddle, and the two entities they allegedly used to carry out the scheme: Jadis Capital Inc., hedge fund manager of the Logos Fund and the Donum Fund, and Jadis Capital's subsidiary, Jadis Investments LLC.
SEC prosecutors say that the church leaders raised more than $12 million from more than 80 investors, mostly elderly parishioners, by promising returns as high as 75 percent.
But as soon as the defendants received the money - from January to November 2005 - they bought luxury cars, jewelry, clothes, meals, and expensive foreign trips, says the SEC. They also allegedly paid operating expenses at Jadis Capital and Jadis Investments, built lavish offices, and old debts owed by Ovid.
The SEC says the defendants lied about the amount of assets under management, the identity and skill of the portfolio managers, the level of supervision of the portfolio managers, and the registration status of the Donum Fund with the SEC.
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