BULLETIN: Another Florida Ponzi Scheme: SEC Sues Estate Of Dead Man, Saying Kenneth Wayne McLeod And His Companies Ripped Off Members Of ‘Law Enforcement’ And Operated Ponzi Scheme For Decades

“The security of the government bonds was a key element of McLeod’s deception but he never purchased any bonds,” the SEC said. “Instead, he used the investors’ retirement savings to conduct a Ponzi scheme, to pay himself, and to pay for lavish entertainment, including annual trips to the Super Bowl for himself and 40 friends.”

McLeod dubbed one of his instruments the “FEBG Bond Fund” or the “FEBG Special Fund,” assuring investors it was “tax free” and earned an annual return of 8 percent to 10 percent, the SEC said.

“He falsely told investors that their principal would be 100 percent invested in and secured by government bonds,” the SEC charged. “McLeod explained to several investors that the fund invested in government securities that provided a 13 percent return. McLeod misrepresented that he used the three to five percent spread to expand FEBG and his other businesses, but the investors’ principal would remain untouched.”

His presentation on the safety of the nonexistent fund was so convincing that some investors “rolled over their retirement and savings accounts into the bond fund or invested their inheritances and their children’s tuition savings,” the SEC said.

Investors were told the fund was “long term” in nature and that “their principal would be locked up for various periods of up to eight years,” the SEC charged.

Like a mini-Madoff, he also issued false account statements that showed “fake interest earnings,” the SEC said.

Because the product appeared to be safe and attractive, “many” investors chose to roll over quarterly earnings “rather than receive distributions,” the SEC said.

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