The Securities and Exchange Commission announced that it had obtained a default judgment against a New York man who previously pled guilty to operating a massive Ponzi scheme that defrauded investors out of at least $5.9 million. The SEC originally charged Christopher Bass, of Menands, New York, in May 2010 with securities law violations and sought injunctive relief in addition to disgorgement of illegally-gained profits.
According to the SEC, Bass operated his scheme from at least January 2007 through June 2009 through a variety of businesses he controlled, including Swiss Capital Harbor-USA, LLC, Swiss Capital Harbor Fund A Partners, L.P., Swiss Capital Harbor Fund B Partners, L.P., and Swiss Capital Harbor Fund C Partners, L.P. Bass promised investors that he would pool their money, which would be handled by European money managers and placed in various ventures including currency trading and bio-fuels. Investors were promised monthly returns ranging from 2.8% to 6%, and offering documents for each of the funds made numerous material misrepresentations concerning investment strategies and returns. In total, nearly $6 million was collected from approximately 400 investors.
Yet, instead of sending investor funds to Europe for investment, Bass kept approximately 80% of the money and used the funds to operate a massive Ponzi scheme. Approximately $4 million was used to pay fictitious interest to investors, to pay business expenses, and to otherwise fund Bass's lavish lifestyle. Additionally, Bass failed to file the required registration statements with the SEC for the offering and sale of these securities.
Bass previously pled guilty to criminal charges of mail fraud and tax evasion in connection with the scheme and for which he is currently awaiting sentencing. He faces up to twenty years in federal prison and a fine of up to $250,000.
A copy of the SEC Complaint is here.
A copy of the SEC Release announcing the default judgment is here.