Court Returns $8M in Investment Money
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HARRISBURG, Pa. (AP) _ A court-appointed trustee is returning nearly $8 million to participants in an unregistered, fraudulent investment program that promised senior citizens sky-high returns, officials with the Pennsylvania Securities Commission said Thursday.
Repayments will be made to 300 people across the country, 94 of them from Pennsylvania, as a result of the three-year-old investigation into the Eagle Cash Management Account System for Debt Recovery, the commission said.
The program _ created by U.S. Estate Group LLC, a Maryland company, and a group of Nevada companies under the name of USEG Capital Management LLC _ promised a guaranteed income of 2 percent a month and 100 percent return of the original investment at the end of 36 months.
Pennsylvania investigators found that both the securities and the salesmen were unregistered and that the investments were being sold primarily to senior citizens on fixed incomes and others who believed that the returns were achievable, the commission said.
Michael Byrne, the commission’s director of enforcement, said the program was essentially a Ponzi scheme, in which the investments of new people joining up were used to pay returns to investors who had been in the program longer. The program targeted senior citizens, he said.
``They were talking in terms of having money for your grandchildren’s college _ that kind of rhetoric,″ said Byrne.
Montgomery County Common Pleas Court Judge Calvin S. Drayer Jr. authorized the Securities Commission on May 28 to distribute the funds to the investors in the first of two payments.
Out of a total of $11.6 million invested, $10.2 million is in the hands of the court.
The investors included 136 residents of Florida, 30 from New Jersey and 10 from Delaware. The rest were scattered throughout the country.
There was no answer Thursday at a Florida phone number for one of the former partners in the company.