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New Jersey Couple Named in Lawsuit by State AG: Ponzi Scheme Allegations

Ford GrahamTwo residents of Princeton, New Jersey, Ford and Katherine Graham, have been accused by the state’s Bureau of Securities of orchestrating a Ponzi scheme in which they “defrauded millions of dollars from investors in their ‘social circle,'” according to a report by NJBiz. According to the lawsuit, they allegedly used the funds provided by their investors to finance their “lavish lifestyle,” with expenses including country club memberships, a vacation to Antigua, and private school and summer camp tuition for their children.

The two allegedly raised a total of $5 million in funds through loans in a period beginning January 2012 and ending January 2014, $1.9 million of which was in the form of unregistered securities, according to the lawsuit. Ms. Graham allegedly solicited investors into the scheme by representing those unregistered securities as “low-risk, high-reward investment opportunities in gas and oil projects,” according to state attorney general Gurbir Grewal. Mr. and Mrs. Graham allegedly established four companies in connection with these activities: Specialty Fuels Americas LLC; Aries Energy Group Venture LLC; CCC Holdings LLC; and Rattler Partners LLC. The funds they raised were transferred to these companies’ accounts, as well as an account belonging to Vulcan Energy International LLC, which was controlled by Mr. Graham.

The lawsuit alleges that in addition to financing personal expenses, the couple used the funds they raised to pay earlier investors. The New Jersey Bureau of Securities is seeking civil penalties against the defendants, as well as restitution to affected investors, and an order barring them from participating in the securities industry in the state.

State attorney general Gurbir Grewal said in a statement: “Ford Graham and his wife allegedly used their social connections in the affluent Princeton community to lure investors into a Ponzi scheme that financed the defendants’ posh lifestyle of country clubs, private schools, and tropical vacations. The Bureau’s action today seeks to hold the defendants accountable for their actions and require them to return the ill-gotten funds to defrauded investors”

Christopher W. Gerold, chief of the New Jersey Bureau of Securities, said in a statement: “Investors tend to lower their guard when someone they know socially or professionally offers them an opportunity to invest in a ‘sure thing,’ as happened here. But this case illustrates the importance of thoroughly vetting the person offering the investment, and the investment itself, before handing over your hard-earned money.”

The lawsuit remains pending.

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