Commission Files Another Ponzi Scheme Action
For years investors have entrusted their capital to a person who failed to invest it, did not try to invest it, or make a profit other than for themselves. The reason – the person soliciting the money was operating a Ponzi scheme. The facts vary from case to case. In some, for example, the solicitor is well known to the investor; in others he or she is virtually a stranger. In some instances, the solicitor takes steps to conceal that a fraudulent scheme is being conducted; in others they do not.
The common thread through many of the Ponzi scheme cases is that investors trust their funds to someone with little or no due diligence. Essentially that is the situation with the Commission’s latest case in this area, SEC v. Charlebois, Civil Action No. 3:22-cv-00223 (W.D.N.C. Filed May 19, 2022).
Defendants in this case are: Wynn A. D. Charbebois, supposedly a self-employed investor and consultant, and WC Private LLC, the holding company for Defendant Charbebois’ investments. For years Defendant Charbebois has successfully pitched potential investors with essentially the same story. Supposedly, he had provided consulting services for a number of companies. Each of those companies compensated him with stock options according to the story. Investors in some instances were shown a list of companies.
Since Defendant Charbebois was about to exercise the options, he decided to permit the investor to participate he claimed. The potential returns would be significant.
Typically, a short time after investors turned over their capital a series of questions would be posed about how much profit would be paid and when. Mr. Charbebois usually deflected the questions with responses that at times offered a reason for a delay. In some instances, Defendant Charbebois fabricated documents to show the investors.
The result was always the same – deflect; and investors waited for years. In fact, however, there were no stock options. The list of firms displayed to some investors were all private companies. No options had been issued to Mr. Charbebois. The investments did not exist, except in the life style of Mr. Charbbebois. Nevertheless, since 2005 the scheme continued.
In the last year it appears that the scheme unraveled. Five civil cases were initiated by investors against Mr. Charbebois. Demand letters were served alleging $1.345 million in investor losses. The Commission added to the growing list of suits by filing its case. The complaint, referencing three investors detailing the pitch made to each, alleges violations of each subsection of subsection of Securities Act Section 17(a) and Exchange Act Section 10(b). The case is pending. See Lit. Rel. No. 25397 (May 19, 2022).