Judge Orders More Than $5.5 Million In Penalties In George Theodule Ponzi That Targeted Haitian-Americans; Massive Litigation Involving Family Members, Winners, Attorneys Continues

It is not nice to be George Theodule today. For starters, the expensive cars and other luxuries are gone — and now a federal judge has issued orders of disgorgement and penalties totaling more than $5.5 million in a Ponzi scheme case brought by the SEC in 2008.

Beyond that, though, people associated with Theodule — family members, winners in the scheme, employees and attorneys who worked for him while the scheme was ramping up — find themselves battling a blizzard of lawsuits filed by the court-appointed receiver in the case and either going to trial or trying to work out settlements.

Read a Dec. 31 filing by Jonathan E. Perlman, the receiver in the case against Theodule, Creative Capital Consortium LLC, A Creative Capital Concept$ LLC and other entities. The filing shows the type of legal exposure individuals who emerge as Ponzi scheme winners may confront, as well as the litigation individuals who allegedly aid and abet a Ponzi may confront.

Several Theodule employees have taken the 5th Amendment, according to Perlman.

Among his assertions was that more than $24 million in fraudulent transfers occurred during the scheme, which now is estimated to involve more than $60 million.

Earlier estimates in the case put the figure at about $23 million.

Theodule, through a network of “investment clubs,” largely targeted Haitian-Americans, the SEC said. Investors, who were told that some of the company’s profits were set aside to help Haiti and Haitian communities in the United States and Sierra Leone, were promised a 100 percent return on their money within 90 days.

In reality, the SEC said, Theodule lost $18 million trading stocks and options, commingled funds and pitched a purported, self-regulatory agency called Smart Investment Management Services LLC (SIMS).

Investors were told SIMS provided “independent verification of their deposits” and provided an “added measure of safety and security,” the SEC said.

It turned out that SIMS was a private company run by a former Creative Capital employee, the SEC said.

Investors said Theodule portrayed himself as a thoughtful, religious man.