SEC Says It’s Stopped $10 Million Ponzi

     DALLAS (CN) – Two Dallas residents duped people for nearly $10 million in a medical insurance-based Ponzi scam, the SEC claims in court.
     The SEC sued Duncan J. MacDonald III, 50, and Gloria Solomon, 71, in Federal Court.
     “Since 2008, Defendants have run a Ponzi scheme that raised almost $10 million from at least 80 investors by falsely alleging that the Defendants’ company generated significant revenue from the sale of medical insurance,” the SEC says in its complaint. “Defendants pitched their program by telling investors that they had hundreds of thousands of premium-paying insured members when, in reality, they never had more than 40.
     “To support their claims of success, MacDonald and Solomon directly and indirectly made misrepresentations to investors about the state of their company’s business, its history, and the use of the investors’ funds. For example, they led investors to believe that their company had a successful history of soliciting paying members, that the company was generating significant revenue from these paying members, and that MacDonald and Solomon had previously sold off a portion of that revenue to a Chinese hedge fund. None of this was true.
     “While MacDonald and Solomon were able to solicit investors into their scheme with these lies, they had to show results to perpetuate the scheme. Accordingly, they began fabricating enrollment figures to materially inflate the number of new paying members. They sent these falsified numbers both to potential investors, to solicit additional investments, and to existing investors, to show growth and to serve as a justification for the bogus returns.
     “MacDonald and Solomon successfully solicited funds from their final investor in December 2011. Shortly after receiving those funds, they were unable to continue making Ponzi payments. To stave off concerned investors, MacDonald and Solomon conducted a stall campaign over the next year in which they concocted various reasons why they could not make payments.”
     MacDonald was chairman of the board and president of Global Corporate Alliance and “an executive officer and/or director in numerous companies he created as part of this scheme.” Solomon was chief administrative officer of Global Corporate Alliance and “held various executive and director positions in the family of companies created by MacDonald,” the SEC says in the complaint.
     It seeks disgorgement, restitution, penalties and an injunction.

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