May 22, 2010 – Edward Allen and David Olson operated their real estate company, A & O Investments, LLC, as a Ponzi scheme according to the Securities and Exchange Commission (“SEC”). The SEC’s complaint filed in an Ohio federal court claims that from September 2005 to December 2008 Allen and Olson raised about $14.8 million from at least 100 investors.
Apparently, A & O Investments enticed buyers by offering promissory notes with annual interest rates of 20%. Allegedly, Allen and Olson claimed that the money raised from the notes would be used to purchase and rehabilitate real estate, primarily in Florida. The complaint further alleges that A & O would profit from sales of the refurbished real estate and Allen and Olson represented to clients that they had been making successful transactions.
The SEC alleges that Allen and Olson recruited investors by sending mass mailings and word of mouth. Also, Allen and Olson apparently solicited customer of their former employer World Group Securities, Inc., a Georgia based securities broker-dealer.