Call it Madoff-lite. Even though it missed that really big alleged scam with Bernie Madoff, the Securities and Exchange Commission is still on the lookout for fraudsters and appears to have caught one in Philadelphia-area fund manager Joseph Forte. The agency charged Forte with operating a $50 million Ponzi scheme and obtained an emergency court order freezing his assets.
Continue reading below
Forte reportedly conducted the Ponzi scheme since 1995 and
solicited about $50 million from about 80 investors through the sale of
securities in the form of limited partnership interests in his firm,
Joseph Forte, LP, which was supposed to be a commodity futures pool.
The
alleged scam consistently lost money, but Forte like Madoff reportedly issued falsified
reports to his investors while withdrawing millions of dollars in fees
for personal use as he roped in new investors to repay earlier investors (in other words a classic Ponzi scheme), the regulators said. And also like Madoff, Forte reportedly has confessed the Ponzi scheme to
authorities after he ran out of new investors to keep the scam going (a classic problem with Ponzi schemes).
There is, however, one unanswered question: Did Forte get caught or give himself up when he ran of people to dupe? If it's the former, then the agency is likely to receive a pat on the back. But if it's the latter (and this alleged scam was going for about 13 years, making it more likely it is the latter), SEC officials are going to get another earful from Congress (even if Forte's fraud pales in comparison to Madoff's).
Meanwhile, Madoff is fighting to stay out of jail after
authorities caught him trying to mail off jewelry and other valuables.
-
George White
See Reuters story
