The Securities and Exchange Commission announced today that it had filed a settle civil action in a Philadelphia federal court against participants of Joseph S. Forte's failed $50 million Ponzi scheme. John Irwin, and his consulting firm, Jacklin Associates, Inc., were charged for their role in the scheme that spanned over a decade, specifically for violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. These violations included allegations that Irwin and his firm solicited investors by providing false information to investors.
Irwin and Joseph Forte formed Forte LP in 1995, promising high returns to investors through a strategy of investing in stock index futures. Irwin performed accounting services for Forte LP, including the preparation and issuance of quarterly investor statements and tax returns. From 1995 to 2008, Forte LP reported annual returns ranging from 18% to 38%, and Irwin is alleged to have used these figures to entice new investors to purchase limited partnership interests in Forte LP. According to the SEC, Irwin provided this information to investors without conducting any due diligence or independent verification of the figures provided by Forte. Additionally, Irwin and his firm prepared quarterly and annual statements given to investors that contained fictitious account information. Numerous other red flags were also ignored that the SEC alleges should have alerted Irwin to Forte's scheme.
Instead, Forte was charged in 2009 with operating a massive Ponzi scheme that ultimately resulted in losses exceeding $50 million to 100 investors. Forte was sentenced later in 2009 to fifteen years in prison and ordered to pay nearly $35 million in restitution to investors.
Irwin has agreed to settle the charges alleged by the SEC without admitting or denying any wrongdoing. In the settlement, Irwin and Jacklin have agreed to a consent judgment enjoining future securities violations, the disgorgement of profits along with pre-judgment interest, and the possibility of civil penalties. Irwin will also be forbidden from practicing as an accountant for any SEC-registered company.