Ponzi Schemes: JP Morgan Chase Looks the Other Way
The SEC is getting aggressive on Ponzi and Prime Bank schemes.
Here we go again. The SEC has shut down another Ponzi scheme. When will it end? It will only end when big banks stop sponsoring, assisting, and ignoring schemes that are operating within their banks.
From October 2006 until the summer of 2009, William Graulich IV of Henryville, PA was operating a fraudulent “Prime Bank” scheme under the nose of the SEC and through JP Morgan Chase bank accounts. Graulich and his firm, iVest Inc., allegedly convinced at least 5 investors to deposit more than 13 million dollars into his accounts, mostly with JP Morgan Chase. Graulich promised weekly returns from 22%-140%. Graulich never made any of the investments that he had claimed, and was brazen enough to use a substantial portion of the funds for personal expenses, payment of back taxes, repayment of creditors, and other miscellaneous expenses.
Schemes like Graulich’s, which promise exorbitant returns with little or no risk to the investor, are exactly what we need to be watching for in today’s financial market. The SEC refers to these schemes as “Prime Bank” schemes, or “High Yield Investment Schemes”. The SEC warns that these programs often promise high returns with no risk, purport trading in sound financial instruments such as standby letters of credit and medium term bank notes, and murky language to disguise the source of financial gain.
It is nice to see that the SEC is getting aggressive and proactive in fulfilling its duties. We hope this aggressive behavior continues, but for now ask a lot of questions. To read the full SEC complaint, click here.
Assisted by: Zach Kady
These types of schemes could not be accomplished without a legitimate bank or institution serving as a front, virtually collaborating and enabling the crime. It's time to make the custodial and prime banks take responsibility for their complicity in criminal activity.