BULLETIN: SEC Charges ‘Sovereign International Group LLC’ Amid Allegations It Funded Ponzi Payout With Cash Infusion From 93-Year-Old Boyfriend Of Accused Fraudster’s Elderly Mother; Arthur Weiss, Ronald Abernathy Charged In Bizarre Scheme That Allegedly Claimed Ownership Of $50 Million Note From ‘U.S. Financial Agency LLC’

BULLETIN: Two men have been charged by the SEC with fraud in an alleged Ponzi scheme that features allegations that read like fiction — although the agency says they are true.

Among the SEC’s spectacular claims is that Ponzi payments to investors were made after the 93-year-old boyfriend of the elderly mother of one of the scheme’s accused operators deposited $100,000  with the scheme.  The scheme also traded fraudulently on the names of Major League Baseball, Paul Allen, co-founder of Microsoft, and Ted Turner, founder of CNN.

Charged in the alleged caper were Ronald Abernathy of Scottsdale, Arizona, and Arthur Weiss of Pasadena, Calif., and Delray Beach, Fla. Also charged was their company: Sovereign International Group LLC (SIG) of Nevada.

Abernathy is 66; Weiss is 61. Both men were pitchmen for other fraud schemes, and used a deposit made by the elderly boyfriend of Weiss’s elderly mother to make payments to investors in their most recent scheme, the SEC charged.

At the time the elderly man deposited $100,000 with Weiss and Abernathy, the SEC charged, their bank accounts “collectively held less than $500.”

The elderly man’s deposit subsequently was appropriated to make $14,450 in Ponzi payments to earlier investors, the SEC charged. All in all, the agency alleged, the scheme gathered $560,000 through the sale of fraudulent promissory notes and investment contracts.

When investors demanded the return of their funds, Weiss and Abernathy piled on the excuses. Investors were told the men traded in “precious ore concentrate,” along with “multi-million and multi-billion dollar financial instruments” and “fine art,” the SEC charged.

But it was all just a massive scam — one that included a claim that the men were in “possession of a ‘medium term note’ issued by an entity called ‘U.S. Financial Agency LLC’ with a purported face value” of $50 million, the SEC charged.

“The U.S. Financial Agency Note is worthless,” the SEC charged.

Prior to issuing a Summer 2009 update to investors, “Abernathy attempted to deposit the U.S. Financial Agency Note with Banc of America Investment Services,” the SEC charged.  “BAI rejected the worthless U.S. Financial Agency Note.  After this rejection by BAI and despite their knowledge that the U.S. Financial Agency Note was worthless, the Defendants issued the Summer 2009 update which falsely told investors that SIG had been assigned and was in possession of more than $50 million in corporate assets.”

As payments to investors became further delayed, the men falsely told an investor that they “were in the final stages of a deal that would result in a $15,000,000 to $20,000,000 payout to SIG and that the only thing delaying the payout is the U.S. Department of Homeland Security which was following its standard procedure to make sure that the money involved in the deal had no ties to terrorist organizations or drug trafficking,” the SEC charged.

“SIG, in its entire existence, has not earned any profits, realized any returns or generated any revenue from any business operations,” the SEC said. “SIG’s only income has consisted of money received from investors.”

The SIG scam began in “late 2008,” the SEC charged.

Previous scams in which Abernathy and Weiss were associated were identified by the SEC as “G-5 Global,” “Safevest LLC” and “The Omicron Group LLC.”

Those three scams led to losses of about $14.7 million, the SEC said.

Read the SEC complaint.

About the Author

12 Responses to “BULLETIN: SEC Charges ‘Sovereign International Group LLC’ Amid Allegations It Funded Ponzi Payout With Cash Infusion From 93-Year-Old Boyfriend Of Accused Fraudster’s Elderly Mother; Arthur Weiss, Ronald Abernathy Charged In Bizarre Scheme That Allegedly Claimed Ownership Of $50 Million Note From ‘U.S. Financial Agency LLC’”

  1. So, I wonder what will happen to Roy Kessel and the Omicron scheme which Weiss and Abernathy were a part of.

      (Quote)

  2. Can you please supply me as to where you got your facts from as it appears that you have some facts missing. There is no mention Roy Kessel in your article. ROY was part of one of their investments The Omicron Group LLC. Has the SEC investigated him as his name seems to be left out of your article. WHY?
    If all the comments above are correct why have Weiss and Abernathy not been indicted by the SEC .

      (Quote)

  3. Susan: Can you please supply me as to where you got your facts from as it appears that you have some facts missing. There is no mention Roy Kessel in your article. ROY was part of one of their investments The Omicron Group LLC. Has the SEC investigated him as his name seems to be left out of your article. WHY?
    If all the comments above are correct why have Weiss and Abernathy not been indicted by the SEC .

    Susan,

    The SEC complaint is here:

    http://sec.gov/litigation/complaints/2011/comp21989.pdf

    The California Department of Corporations cease-and-desist order is here:

    http://www.corp.ca.gov/ENF/pdf/2010/OmicronGroup_DR.pdf

    Kessel is referenced in the cease-and-desist order. I do not know where that matter stands right now.

    If you look at the SEC document (link above), you’ll find some phone numbers for the SEC office that brought the complaint against Abernathy and Weiss.

    The SEC does not “indict” defendants. It brings allegations against them in civil court and can refer matters to the U.S. Department of Justice for criminal prosecution.

    Patrick

      (Quote)

  4. Again I must mention along with the previous comments! How dare you print such things without doing further research! Of course you print that all your alleged accusations are legitimate; however, you have not checked who is really behind this! This is the question to ask…”what about Roy Kessel?” You say that you do not know where that stands right now and that is really where you should be doing your research. How interesting that is that no one knows…WHY DON’T YOU???? ASK MORE QUESTIONS??? QUESTION WHAT YOU HAVE SO FAR BECAUSE, YOU HAVE A PIECE OF TWISTED TRUTH AND MISTRUTH. THEN YOU PRINTED IT SO TO THE COMMON PERSON, NOW IT’S TRUE. PLEASE DO YOURSELF A FAVOR AND QUESTION FURTHER AUTHORITY. THERE IS MORE TO BE SEEN.

    THANK YOU,
    INVESTOR

      (Quote)

  5. I can also confirm that it was Roy Kessel who took members’ money, as it was he who placed the members’ money into an escrow account that was supposed to be safe. As the attorney, he had the responsibility to safe-guard these funds, but he removed them for his own purposes, and has refused to communicate with members who asked about their funds.

    It is not fair to blast out items about the other partners, with the exclusion of the real culprit.

      (Quote)

  6. As has been referred to once already………the source of the information is posted with links. If you have a problem with the information, follow the links and complain to them. Perhaps you, yourself can aid the SEC in investigating him. But you certainly don’t want that do you. Then you’d have to admit being part of the scam.

      (Quote)

  7. I figure it’s a good time to jump in and revive this thread. First off, Roy Kessel was not the mastermind behind Sovereign International Group – Ronald Abernathy and Arthur Weiss were all the men left standing after Omicron, Safevest, don’t forget G-5 Global – and all the other scam corporations – so on their own they formed SIG. The next hearing for those interested will be on November 5th 2012.

    Judge Gordon Quist, US District Judge of US District Court for the Western District of Michigan, Southern Division – sent out October 2, 2012 an “Order Adopting Report and Recommendation” to all concerned – and concludes with: IT IS FURTHER ORDERED that this matter is referred to Magistrate Judge Carmody for an evidentiary hhearing and submission of a report and rcommendation regarding the proper scope of the injunction and the amount of damages, if any, for which Defendents are liable.”

    For those who are interested… stay tuned.

      (Quote)

  8. My father was the 93 yr old man who is always mentioned when this scam is reported. I am waiting to hear if this will be pursued in the federal courts. All of them: Kessel, Abernathy and Weiss should be in jail. Weiss took his own mother’s money, but she would not report it. She died without a penny.

      (Quote)

  9. The SEC vs SIG, Abernathy and Weiss came to an end earlier this year. I thought I’d post here so you know there is closure. Will the courts or the victims ever receive a cent – I doubt it…

    A final Judgment as to defendents Abernathy, Weiss and SIG was added on March 8, 2013 – which quickly says that it is hereby ordered, adjudged and decreed that the defendants are permanently restrained and enjoined frm violating Section 17a of the Securities Ace of 1933 – in the offer of sale of any security by the use of any means of transportation or communication in interstate commerce by use of mails, directly or indirectly
    a) to employ any device, scheme or artifice to defraud;
    b) to obtain money or property by means of any untrue statement of a material fact or any omission of material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
    c)to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

    And then it was further ordered – that Abernathy shall pay a civil penalty of $250,000. to SEC, and Weiss shall pay a civil penalty of $250,00 and that SIG shall pay a civil penalty of $250,000. (Which btw – Weiss closed up SIG two years ago in Nevada – disregarding how one can close up a corporation – he wrote there were no law suits pending – when SEC civil suit was.)

    Gordon J. Quist, US District Judge signed off on the paperwork – with It is further ordered, adjudged and decreed that this court shall retain jurisdiction of this matter for the purposes of enforcing the terms of this Final Judgment.

    So my question – this was a civil suit – is there any way to make a criminal case against Abernathy and Weiss?

      (Quote)

  10. Roy Kessel was sentenced to 4 years, and ordered to pay 3.3 million in restitution. Good luck collecting. He has spent the last 4 years running around the country and playing golf at his club. Who paid for that?

      (Quote)

  11. I was an investor also and didn’t see a penny back. How come Roy isn’t serving his sentence of 4 years? I know he was disbarred. Does anyone know how to get atleast some money back? $55k lost.

      (Quote)

  12. CR: How come Roy isn’t serving his sentence of 4 years?

    Roy D. Kessell is listed as an inmate at Oxford FCI in Wisconsin. Projected release date is July 22, 2018.

    Patrick

      (Quote)

Leave a Reply