The Securities and Exchange Commission has charged a Michigan stock broker with fraud, alleging he acted as a salesman in an alleged $250 million Ponzi scheme the agency first exposed nearly two years ago.
The agency alleged Frank Bluestein lured elderly investors into the scheme after convincing many of them to refinance their homes. The SEC said Mr. Bluestein acted as the single-largest salesperson in the scheme operated by Edward May and his company E-M Management Co.
In November 2007, the SEC claimed Mr. May ran the long-running scam promising profits on lucrative telecommunication contracts with Las Vegas resorts and casinos. Authorities said the contracts didn't exist and the scheme dates back to at least 1998. That case is still in litigation, according to an SEC spokesman, who said the case is pending over monetary penalties.
In its latest charges connected to the case, the SEC said Mr. Bluestein specifically targeted potential investors who were retired or elderly and conducted "investment seminars" in Michigan and California to lure them into investing in E-M securities.
The complaint, filed in federal court in Michigan, alleged Mr. Bluestein raised about $74 million from more than 800 investors through the sale of the securities over a five-year period.
A lawyer representing Mr. Bluestein wasn't immediately available for comment.
The SEC further alleges Mr. Bluestein misrepresented to investors that the investments were low risk and misled investors about the compensation he was receiving from the offerings by failing to disclose that he received at least $2.4 million in commissions from Mr. May and E-M in addition to the $1.4 million in disclosed compensation he received from investor funds.
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