Alpharetta firm named in $25M Ponzi scheme

Two federal agencies took action in U.S. District Court Jan. 15 to stop an Alpharetta company and its owner, a Dawsonville resident, from continuing an alleged $25 million Ponzi scheme involving more than 100 people.

Alpharetta-based CRE Capital Corp. and James G. Ossie allegedly ran a Ponzi scheme, using money from newer investors to pay older investors to guarantee returns. The Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) filed separate civil complaints against CRE and Ossie.

According to court documents, since early 2008 the company and Ossie raised at least $25 million from more than 120 owners promising to invest the money in Japanese currency exchange markets.

The complaint alleges that since June 18, 2008, rather than making money, CRM and Ossie — the company's president and sole owner — lost approximately $4.4 million trading. To cover up the gaffe, CFTC claims Ossie and CRE operated a Ponzi scheme.

CRE offered trading contracts that promised a guaranteed 10 percent return in 30 days, according to the complaint.

"Investors must run the other way when approached by anyone claiming to guarantee exorbitant monthly returns, like those promised by CRE and Ossie," said CFTC Acting Director of Enforcement Stephen J. Obie.

In its complaint, the SEC also alleged that CRE planned a $100 million stock offering early this year, selling shares at $2 per share, while claiming the stock were worth $40 to $45 per share according to an independent analyst's estimates. The complaint alleges that these projections were misleading because CRE was insolvent.

The day the complaints were filed, Ossie and CRM consented to an order granting the SEC's requests for a temporary restraining order, an asset freeze, an accounting of all funds raised, the appointment of a receiver for defendant CRE and an order expediting discovery and preventing the destruction of documents.

The complaint also seeks preliminary and permanent injunctions against future violations, disgorgement of ill-gotten gains plus interest and civil penalties.

The CFTC seeks restitution, disgorgement, civil monetary penalties and permanent injunctions against further violations of the federal commodities laws and against further trading.

Ossie was not available for comment.

What is a Ponzi scheme?
According to the Commodity Futures Trading Commission (CFTC) , a "Ponzi" scheme is one in which little or none of the money sent in by investors is ever invested as promised in the commodity markets. It is named after Charles Ponzi, its inventor, and also called a pyramid scheme because of its structure.

The operator of the scam steals the funds and creates the illusion of a successful business by using some of the money put in by later investors to pay phony "profits" to earlier ones. This tactic makes it appear to victims that their investment is actually making money, which in turn attracts additional people.

- www.northfulton.com

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