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SEC Charges Broker In Ponzi Scheme
The SEC has charged Ohio broker Stephen Donahue of Donahue Securities with cheating as many as 250 investors out of $6 million.
The SEC calls the fraud a Ponzi Scheme, in which investors were sold fictitious investments and promised a high rate of return. Money from new investors was used (improperly) to pay off earlier investors.
The SEC has accounted for only about $1 million. A judge has placed the firm in receivership.
Source: Investment News, March 26, 2001
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