Federal officials said Wednesday they've uncovered a $40 million Ponzi scheme in Folsom that boasted glowing investment returns even as the financial markets were sinking.
The scheme lured about 150 customers, mostly from the Sacramento area, over a four-year period by advertising low-risk investments paying 42 percent a year, the Securities and Exchange Commission said.
The SEC filed a lawsuit accusing a Folsom firm, Equity Investment Management and Trading Inc., and its two principals, Anthony Vassallo and Kenneth Kenitzer, of fraud. The firm stopped taking money from investors last November, the SEC said.
Nevertheless, U.S. District Judge Lawrence K. Karlton issued orders shutting down business operations of Vassallo and Equity Investment.
In a preliminary injunction agreed to by Vassallo, the judge said there is reason to believe he will continue to violate federal securities statutes. The order freezes all his assets and prohibits him from engaging in any transaction involving assets he owns or controls.
Karlton ordered Vassallo to submit within 21 days the location and disposition of funds received from investors, the location of all bank and brokerage accounts he controls, and the location and value of all his assets.
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