SEC Halts Ponzi and Affinity Fraud Scheme

The Securities and Exchange Commission has obtained an emergency court order to halt an alleged Ponzi scheme and affinity fraud that collected more than $23 million from thousands of investors in the Haitian-American community nationwide through a network of purported investment clubs.

The SEC alleges that Creative Capital Consortium LLC and A Creative Capital Concept$, LLC (collectively, Creative Capital) and its principal, George L. Theodule, began conducting the scheme as early as November 2007 by urging investors to form investment clubs to funnel funds to Theodule and Creative Capital. Theodule solicited investors by guaranteeing a 100 percent return on their investment within 90 days based on his claimed successful trading of stocks and options. According to the SEC's complaint, investors also were promised that Creative Capital's trading profits were being used to fund new business ventures, including some to benefit the Haitian community in the U.S., Haiti, and Sierra Leone. The SEC alleges that Theodule has lost at least $18 million trading stocks and options just over the last year, and Creative Capital merely repaid earlier investors with monies collected from new investors in typical Ponzi scheme fashion. The SEC also alleges that Theodule has commingled investor funds with his personal funds and misappropriated at least $3.8 million for himself and his family.

"This alleged Ponzi scheme preyed upon unsuspecting members of a close-knit community, attempting to take advantage of the trust they had in each other," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "As always, investors need to be wary of investment opportunities that guarantee results and tout extraordinary returns."

David Nelson, Director of the SEC's Miami Regional Office, added, "This case demonstrates that individuals will often rely on a shared affinity to gain investors' trust. In this case, Theodule allegedly abused that trust to con thousands of investors in the Haitian-American community."

Judge Donald M. Middlebrooks, U.S. District Judge for the Southern District of Florida, issued the order on December 29 placing Creative Capital under the control of a receiver to safeguard assets, as well as other emergency orders, including temporary restraining orders and asset freezes.