The Securities and Exchange Commission announced Friday that on Aug. 27, it filed an amended complaint that adds allegations of fraud against an Ontario man, Andrew Lech.

The SEC alleges that he was involved in a US$17 million offering fraud that was the subject of the commission’s lawsuit filed in the U.S. District Court in Cleveland on June 23, 2003. The previous orders the court entered against Lech based on his unregistered offer and sale of securities, including an order freezing his assets, remain in effect, it said.

The SEC’s amended complaint alleges that Gary McNaughton, of Amherst, Ohio, raised $17 million from investors by selling them notes that guaranteed extraordinary returns of up to 20% per year. It also alleges that McNaughton told investors that their guaranteed monthly return would be generated by Lech who would invest their funds in stock options.

According to the amended complaint, however, Lech did not invest investor funds. It claims they operated a Ponzi scheme by using new investor funds to pay previous investors their guaranteed monthly returns. The SEC’s amended complaint also alleges that Lech used investor funds he received from McNaughton to pay numerous personal expenses. None of these allegations have been proven.

The SEC reports that on Aug. 23, the Court entered a final judgment against McNaughton, with his consent, for his involvement in the scheme. It also ordered that McNaughton was liable for disgorgement plus prejudgment interest of $6,228,351, representing profits he gained from his scheme. The judgment required McNaughton to pay $11,815.24 and waived the remainder of the disgorgement based on his sworn financial statement which showed that he could not pay more.