An unregistered investment fund that targeted novice investors in the Ghanaian expat community in New York and New Jersey was actually a Ponzi scheme, the U.S. Securities and Exchange Commission (SEC) alleges.
The regulator filed a complaint in U.S. district court for the Eastern District of New York (EDNY) alleging that Ernest Ossei Boateng and his companies, Intercontinental Wealth Network LLC and I Wealth Network LP, defrauded investors in an alleged Ponzi scheme that took in over US$16 million from novice investors between January 2020 and March of this year.
According to the SEC’s complaint, the scheme primarily targeted Christians of Ghanaian heritage, promising guaranteed returns from an investment fund that would pursue a low-risk investment strategy.
However, instead of investing as promised, the SEC alleged that US$6.6 million of investors’ money was used to pay returns to earlier investors, US$5.8 million was misappropriated for personal expenses, and the money that was invested resulted in trading losses from risky, speculative day trading.
The allegations have not been proven.
The SEC is seeking permanent injunctions, disgorgement, civil penalties and trading prohibitions against Boateng.
“We allege that the defendants’ investors included retirees, taxi drivers, home health care providers, students, an ailing widow with young children and at least two churches and one prayer group,” said Thomas Smith, Jr., associate director of the SEC’s New York office, in a release.
“The defendants’ sales pitch to victims included assuring them that their investments were safe and without risk — telling many their money was protected by so-called ‘financial, investment insurance.’ That’s as big of a red flag as we see in these types of scams,” he added.