West Virginia man settles fraud case with SEC
dailymail.com | 3/20/08 | Staff Writer
At least 150 investors in 25 states will recover a fraction of their losses from what federal authorities say was a $21 million Ponzi scheme run by a West Virginia man.
Ralph Gibbs of New Haven agreed to return more than $4.1 million in cash, along with two real estate properties and personal property, to settle civil fraud charges, the Securities and Exchange Commission said Wednesday.
Separately, Gibbs, 56, pleaded guilty Wednesday to a related criminal count of mail fraud in federal court in Virginia. He faces up to 20 years in prison and a $250,000 fine when he is sentenced on June 27, said Chuck Rosenberg, U.S. attorney for the Eastern District of Virginia.
Gibbs' attorney, Thomas Scarr, said Gibbs has been cooperating with both the SEC and the Justice Department.
A receiver has been appointed for a trust Gibbs had established for investors, Scarr said.
The SEC said the trust, which contains $4.1 million plus accumulated interest, will be liquidated and the money distributed to injured investors. Gibbs raised funds through his Golden Summit Group by promising investors large returns and guaranteeing the return of their principal investments. Instead, Gibbs operated a Ponzi scheme in which he created the illusion of a profitable trading company, the SEC said.
Of the $21 million obtained from investors, Gibbs lost $6.3 million through currency trading. He used about $7.5 million generated by new investments to hide the losses, the SEC said.
Gibbs also spent more than $2.9 million for personal expenses, including more than $1 million for a new house, the SEC said.
The proposed settlement has been submitted to the U.S. District Court for the Eastern District of Virginia for approval.