SEC Alleges Multi-million Dollar Fraud in Virginia

Lawrence R. Beebe, CPA, Principal

While Bernard Madoff dominates the financial news with his conviction for cheating investors out of billions of dollars by operating a Ponzi scheme, the SEC continues to investigate lesser known advisors who may have mirrored Madoff on a smaller scale.  The SEC recently filed charges against John M. Donnelly of Charlottsville, Virginia, accusing him of running a Ponzi scheme that defrauded as many as 31 investors out of $11 million.  The SEC alleges that Donnelly sold limited partnership interests in three investment funds while claiming to have produced investment returns as high as 22%.  The SEC charges that Donnelly claimed that he produced these great investment returns through trading of securities when in reality he has not made a single trade since 2002.  They further allege that Donnelly used investor funds to payoff other investors while taking approximately $1 million for himself in the past three years.


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