According to the Associated Press (AP), the year 2009 saw the highest number of Ponzi schemes in recent years. In fact, the number of Ponzi schemes discovered in 2009 (the latest figures available) nearly quadrupled the numbers a year earlier. There were more than 150 Ponzi and other fraudulent investment schemes reported by the U.S. Securities and Exchange Commission (SEC), compared to just 40 uncovered in 2008. Due to Ponzi schemes, thousands of investors lost more than $16.5 billion in 2009 in all 50 states.
A Ponzi scheme, as defined by the SEC, is “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.”
One of the latest was committed by a man who billed himself as the youngest Black CEO of a public company. Now the SEC has charged Ephren Taylor, 29, with a multi-million dollar fraud scheme. Taylor funneled the money though his company, North Carolina-based real estate venture City Capital Corp.
Taylor, who has appeared on national TV talk shows such as "The Montel Williams Show" and "The Big Idea with Donny Deutsch," was charged with fraud by the SEC for an alleged $11-million Ponzi scheme that targeted socially-conscious churchgoers in 40 states.
According to the SEC, Taylor fraudulently sold $7 million of notes said to bear 12 percent to 20 percent annual interest rates to fund small businesses such as laundries, juice bars and gas stations. SEC says that more than 100 investors including members of the New Birth church bought the notes, while more than 250 investors bought the machines. It said the scheme ran from 2008 until late 2010, when new funds dried up.
The complaint also states that Taylor also raised $4 million by selling "sweepstakes" machines loaded with casino-style games, with promised returns of 72 percent to 2,400 percent per year.
The SEC claims City Capital Corp promised to donate some of its revenue to charity but instead diverted money to promote his books, hire image consultants, fund his wife's singing career, and pay his bills.
Taylor, whose last known residence was in New York City, is currently missing.