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Retirement Planning > Social Security

Craigslist Ponzi scheme snares retired teacher: State regulators

By Melanie Waddell

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Securities regulators in Massachusetts and Alabama issued cease-and-desist orders Wednesday against Premiere Asset Management, Inc. of Talladega, Alabama, and its principals for orchestrating a Ponzi scheme through an ad on Craigslist.

Secretary of the Commonwealth William Galvin of Massachusetts charged Premiere Asset Management — which was not registered as a broker-dealer or investment advisor–and its principals with fraud in offering unregistered securities in what an administrative complaint describes as a Ponzi scheme.

The Massachusetts Securities Division issued a temporary cease-and-desist order against the respondents, while the Alabama Securities Commission is also seeking a cease-and-desist order against Premiere and its principals.

The Massachusetts case involves a retired school teacher in the state who sent Premiere money last year after responding to an advertisement on Craigslist that promised a 100 percent return in as little as 48 hours. A spokesperson in Galvin’s office said that the school teacher invested nearly $200,000.

The spokesperson in Galvin’s office said there are “other victims” in Alabama, and that more ”could emerge.”

“An unregistered solicitor assured the investor his account was 100 percent secure ‘with the most reputable bank in NY, bank of Melon (sic),’” the Massachusetts complaint states. 

The investor’s initial wire transfer, and a subsequent one, went to a regional bank in Alabama, according to the administrative complaint filed in Massachusetts.

Bank of New York Mellon is not involved in the complaint.

“The investor had put all his retirement money into the Premiere offering, despite a warning from his brother that it looked like ‘another scam,’” according to the complaint.

“Ultimately, Premiere, which is not registered as either a broker-dealer or an investment advisor, used the Massachusetts investor’s retirement money to fund its own shopping spree,” the complaint noted.

Shortly after the investor’s transfer for a second asset agreement, all of Premiere’s bank accounts were closed. “In addition, the bank records show that Premiere used funds, in the period immediately following the Massachusetts investor’s investment, for personal expenditures, including debits for steakhouses, Applebee’s, Chick-fil-A and Walmart,” the complaint noted.

The complaint seeks full restitution to investors and a permanent bar against the respondents from all securities business in Massachusetts, along with a permanent cease-and-desist order and an administrative fine.

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