The US Securities and Exchange Commission has filed a criminal complaint against three men who duped over 1000 people into investing into an alleged Ponzi scheme.
Two of the men that have been charged in the filing were pastors at churches in Maryland and purportedly used their influence within the church to attract congregants into investing in a fraudulent Forex and cryptocurrency trading operation.
South African national Dennis Jali, John Frimpong and Arley Johnson allegedly ran two different companies identified as Smart Partners and 1st Million which managed to raise over $27mln from approximately 1200 investors.
The SEC alleges that Jali, Frimpong and Johnson ‘exploited common ancestry and/or religious affiliations to earn investors’ trust’ and many of the victims were healthcare workers and members of churches attended by the three men. Jali and Frimpong, the latter a Ghanian national, alleged targeted African immigrants as prospective investors.
The three men convinced investors that Jali and a team of licensed and skilled Forex traders would invest their funds in foreign exchange and cryptocurrency trading while promising monthly or quarterly returns. The principal investments made were also promised to be repaid in full after 12 months. According to the filing none of these assurances were met.
It is alleged that Jali, Frimpong and Johnson used the funds for their own personal use, while making some payments to early investors to keep up the ruse of the fraudulent operation.
Two years of lies
Jali and Frimpong set up a company called Smart Partners in 2017 that claimed to be a financial consulting and private trading company that specialized in cryptocurrency and Forex trading.
The pair began soliciting investors through two businesses, namely 1st Million Dollars and the previously mentioned Smart Partners.
Jali was responsible for maintaining bank accounts for the two companies which received funds from unwitting investors. Both Jali and Frimpong pretended to be expert Forex and cryptocurrency traders and in 2018, Johnson was hired to manage payroll and make payments to investors.
Jali went as far as renting out an office in Maryland to put up an appearance of legitimacy and the trio used the space to hold meetings with prospective and onboarded investors.
New investors were initially garnered through word-of-mouth referrals but over time the trio began holding presentations to prospective investors.
The SEC filing claims that investors were requested to make a minimum initial investment of $5000 which were touted to garner monthly or quarterly returns of 6% to 42% of the initial capital invested.
Things unravel, Jali flees to South Africa
In the first quarter of 2019 the scheme began to unravel as Jali, Frimpong and Johnson were unable to pay out monthly dividends to investors as the amount owed exceeded
new investor funds coming into the scheme.
In May Jali and Frimpong held a meeting which investors were invited to where the pair announced the dissolution of the companies while promising a ‘settlement’ that were equal to the dividends owed as well as the return of their initial capital investments.
However a few weeks later Jali fled America, returning back to South Africa, his country of birth. Investors never received any of the promised dividends or their initial investments.
During the two years operating the fraudulent scheme, Jali allegedly used misappropriated funds to purchase a variety of personal items including two luxury vehicles, private jet charters, airfares and hotel stays as well as designer retail items. He had also used some funds for a deposit on a home in Atlanta.
The South African had also used at least $7mln to purchase Bitcoin.