Alleged $800,000 Affinity Fraud Scheme Prompts SEC to Sue GTF Enterprises and Its Money Manager

U.S. Securities and Exchange Commission has filed a securities fraud lawsuit against investment firm GTF Enterprises Inc., money manager Gedrey Thompson, and associates Sezzie Goodluck and Dean Lewis. The SEC claims that GTF and Thompson targeted investors from the African-American and Caribbean communities in Brooklyn, NY. The affinity fraud scam bilked at least 20 investors of over $800,000 between 2004 and 2009.

The SEC claims that Thompson convinced clients to invest the money in GTF in exchange for lucrative investment returns with guaranteed safety of principals and other promises. He then went on to invest a “fraction” of the clients’ funds (losing thousands of dollars in the process), while using hundreds of thousands of their dollars to pay for his own expenses. The affinity fraud scheme cost some investors their life savings.

Among the multiple misrepresentations that the SEC says Thompson made to investors was the claim to one client that her investment was “150% guaranteed.” He allegedly told another investor that he could make him a millionaire. Thompson and GTF allegedly covered up the securities fraud by generating bogus quarterly account statements for clients. Goodluck and Lewis are accused of helping Thompson with his investment scheme.

“Our firm has handled many affinity fraud cases and has recently seen a substantial increase in such claims, remarked Stockbroker Fraud Attorney William Shepherd. “Affinity fraud occurs when dishonest people target victims who trust them because of a common language, race, religion, background or even occupation. It is reprehensible when stockbrokers, financial advisors and others take advantage of this common bond. Fortunately, most judges, juries and arbitrators who decide these cases agree. However, some affinity fraud victims are hesitant to take legal action to recover their losses. Others properly feel it is their duty to ‘clean up’ their own neighborhood.”

Related Web Resources:
SEC Says New York Investment Firm GTF Defrauded Investors, Wall Street Journal, May 28, 2010
Read the SEC Complaint (PDF)