SEC Takes Enforcement Action Against $20 Million South Carolina Ponzi Scheme, Investors In Florida Affected By Fraud

In April of 2023, the Securities and Exchange Commission (SEC) publicly confirmed the filing of securities fraud charges against South Carolina’s Michael J. French and two companies that he owned and controlled: MJF Holdings, LLC and MJF Capital, LLC. Mr. French is accused of using these companies to perpetuate a $20 million Ponzi scheme. The SEC reports that more than 400 investors were affected, including investors in Florida. In this article, our Miami Ponzi scheme investment losses attorneys discuss the allegations raised by the SEC.

Background: What is a Ponzi Scheme? 

A Ponzi scheme is a type of investment fraud. At its core, it involves the promises of high returns to investors in exchange for their money. The scheme operates by using money from new investors to pay off earlier investors—thereby creating the illusion of profitability and legitimacy. However, in reality, there is little or no actual business or investment generating profits. Eventually, the scheme collapses when it becomes impossible to attract new investors or when too many investors try to cash out. Though, some Ponzi schemes last for many years (even decades) before they fall apart.

 SEC Complaint: Investors Promised Above Market Returns, Funds Shuffled Around 

Michael J. French is accused of using MJF Holdings, LLC and MJF Capital, LLC to carry out a Ponzi scheme. The SEC filed a securities fraud complaint against Mr. French—and his companies—in the United States District Court for the Northern District of Georgia. Along with other things, Mr. French stands accused of fraudulently selling over $20 million in high-yield promissory notes to more than 400 investors.

The promissory notes in question were marketed as “low risk” investments that would generate a guaranteed one-year return of 12 percent. They were sold to investors as being backed by safe commercial loans. However, the SEC contends that Mr. French simply was operating a Ponzi scheme. Money was being shuffled around between investors and diverted to support the lavish lifestyle of Mr. French.

The SEC is Seeking a Wide Range of Penalties 

As part of its enforcement action, the SEC is seeking a wide array of sanctions and penalties against Mr. French and his companies. Specifically, the agency seeks:

• Findings of violations of federal securities laws;
• Injunctive relief against the companies;
• An asset freeze against Mr. French and his companies;
• A full accounting of financial assets; and
• Payment of restriction to investors/disgorgement of ill-gotten gains.

Notably, the SEC has also named several relief defendants in its securities fraud action. A relief defendant that may be pursued as one that received ill-gotten money from the preparator.

 Set Up a Confidential Case Review With a South Florida Ponzi Scheme Attorney

At ​Carlson & Associates, P.A., our Miami investment fraud attorney has the professional expertise to handle all types of Ponzi scheme cases. Did you lose money in a Ponzi scheme? You need a lawyer. Call us now to get immediate help with your securities fraud claim. We handle Ponzi scheme losses cases in Miami, Southeast Florida, and all across the surrounding region.

Source:

sec.gov/litigation/litreleases/2023/lr25688.htm