NorCal company involved in Ponzi scheme

March 11, 2009 6:22:21 PM PDT
Northern California has its own Bernie Madoff-style investment scandal. It's on a much smaller scale, but just as devastating to individual investors who lost money.

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On Wednesday, the Securities and Exchange Commission froze $1.2 million in assets against a company called Equity Investment Management and Trading, and is now looking for another $39 million that remain missing.

It filed a civil complaint against two Northern Californians, 29-year-old Anthony Vassallo and 66-year-old Kenneth Kenitzer.

The SEC says those men took $40 million from 15o investors in five years.

Anthony Vassallo and Kenneth Kenitzer ran Equity Investment Management and Trading out of an office in Folsom.

Mr. Kenitzer lives in Pleasanton.

The SEC says most of the people who gave money to them were members of an, as-yet unnamed church group, but records show that Mr. Vassallo graduated from Brigham Young University.

"It is focused on a community of people who have trust built around, this relationship. It is an affinity they share," said SEC attorney Tracy Davis.

The SEC says that beginning in 2004, Vassallo approached investors and claimed to have special computer software that guaranteed profits in the stock market. In reality, it did not deliver.

"What these two individuals did is they took money from investors and promised them returns of 3.5 percent per month, promising to invest in stocks and options for minimal loss. And, they used it for their own purposes," said Davis.

Instead, the sec says Vassallo used the money for himself, putting some of it into a Utah mine, and also a strip mall.

As EIMTS profits fell, the complaint accuses the men of faking documents and taking elaborate steps to hide losses from investors.

"At one point in 2008, Vassallo showed investors screen shots of the supposed accounts where it showed $50 million in assets. That was a complete fiction; the trading account had shut down. There was no money left in the trading account, so Vassello completely lied to investors," said SEC Regional Director Michael Dicke

Two signs that may help you spot a Ponzi scheme include regular profits that rarely change with the market, or being unable to get your money when you want it.

Lawyers for Vassello and Kenitzer did not return our calls, and both men remain free. The U.S. Attorney's Office is investigating for criminal charges.

  • SEC Complaint

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