Two Florida men were accused Thursday of running a Ponzi scheme targeting investors in several Ohio cities. Edward Allen, 35, from Auburndale, Florida, and David Olson, 60, of Lakeland, Florida, were each charged with thirty federal offenses, including conspiracy, mail fraud, wire fraud, and money laundering. Each man faces a maximum twenty-year prison sentence and a $5 million fine.
Allen and Olson formed A&O Companies in 2005, and during a three year period between 2006 and 2009, sought out investors for the company's real estate ventures, promising annual returns ranging from twenty to forty-five percent. Instead of investing in real estate, the pair used investor funds for personal expenses, employee salaries, and to pay off old investors.
The pair issued promissory notes to investors, telling each investor that the notes were secured by lakefront property in Florida. Yet, authorities say the property was worth much less than the $8 million issued in promissory notes, and lost further value when a sinkhole developed. Falsified documents were also provided to lenders about the mortgages.
The Securities and Exchange Commission filed a civil suit against Olson and Allen in 2010, alleging the pair raised nearly $15 million from at least 100 investors in nine states. Both worked at World Group Securities Inc., and used their positions as registered representatives to solicit investors. The pair settled with the SEC in May 2011.