The Securities and Exchange Commission accuses three Texas men of running a Ponzi scheme that raised at least $91 million from over 200 investors.
Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner, all of Dallas-Fort Worth, have been charged with violating federal securities law’s antifraud and registration rules, according to an SEC news release.
Alexander and Welsh executed the scheme from May 2021 to February 2024 via Vanguard Holdings Group Irrevocable Trust, which Alexander controlled, according to authorities. According to the SEC, the pair promised investors 12 guaranteed monthly payments ranging from 3% to 6%, and the money would be restored after 14 months. According to officials, Alexander and Welsh claimed that VHG was a very profitable worldwide bond trading firm with billions of dollars in assets that earned returns via bond trading and related activities.
Conner allegedly funneled more than $46 million in investor cash to VHG via the Benchmark Capital Holdings Irrevocable Trust, which he controlled. All three men also offered an alternative to safeguard investments against loss using a fictitious financial instrument known as a “pay order.”
According to the SEC, VHG had no revenue source, the monthly “returns” were actually Ponzi payments, and the “pay order” protection was illusory.
Alexander and Conner stole millions of dollars in investor money for personal use, including Conner’s purchase of a $5 million mansion, according to the SEC.
“As we allege, the defendants conducted a large-scale Ponzi scheme that caused devastating losses to investor victims, while Alexander and Conner misappropriated millions of dollars of investor funds,” said Sam Waldon, Acting Director of the SEC’s Division of Enforcement. “We remain unwavering in our commitment to hold individuals accountable for defrauding investors.”
The SEC has charged Alexander, Welsh, and Conner with violating federal securities laws’ antifraud and registration provisions. It seeks permanent injunctions, disgorgement of fraudulent proceeds with prejudgment interest, and civil penalties against each of the defendants.
