Florida Agenda

Agenda Investigation

Wilton Manors Man Defrauded many LGBT Investors

WILTON MANORS – Last week, in what sounded more like a whimper than a bang, accused Ponzi schemer Jim Ellis pleaded guilty to charges that he had solicited over a dozen investors since 2004 with the intent to defraud them.

Appearing before Judge Kathleen Williams in U.S. District Court for the Southern District of Florida, Ellis

Pleaded guilty to one count of conspiracy to commit wire fraud, and could be subjected to hundreds of thousands of dollars in fines. Ellis is likely to receive a reduced penalty when he is sentenced on April 11, based upon his cooperation with investigators in the case against the Ponzi scheme’s alleged mastermind, George Elia.

As we first reported last spring (Florida Agenda, April 12, 2012, COVER, “Federal Authorities Detail Complaint against Oakland Park man charged in $11 Million Ponzi Scheme: ‘Rainmaker’ alleged to have Bilked Million$ from Wilton Manors Residents”), Elia—who was arrested on March 27, 2012 in Las Vegas—is believed to have bilked as much as $11 million from victims, many of them gay retirees living in Wilton Manors.

The federal charges against Ellis said that he falsely represented investing at least $5 million of his own money with Elia, money he claimed to have inherited from his parents. Ellis further told prospective marks that he had earned between 16 to 20 percent in annual returns, about $20,000 to $24,000 per month.

SEC investigators say that when Ellis made those representations, his net worth was about $200,000, and that there was no evidence he inherited an estate from his parents. Records indicate that businesses owned by George Elia paid Ellis more than $2.1 million between 2004 and 2011, but federal investigators said the payments were not actual investment returns.

In a strange—and uniquely gay—twist to the proceedings against Elia, last month Assistant U.S. Attorney H. Ron Davison filed a motion asking the court to prohibit Elia’s attorneys from preemptively excluding gay jurors from deciding his case.

In his argument, the prosecutor noted that, “George Elia was an equal opportunity con man,” and the sexual identity of prospective jurors should have no bearing upon their ability to render a fair and unbiased verdict. “Sexual orientation should be treated like race, gender, and ethnicity for purposes” of jury selection, Davison argued.

“Rainmaker” alleged to have Bilked Million$ from Wilton Manors Residents

By RORY BARBAROSA

MIAMI – The Securities and Exchange Commission (SEC) has released a list of charges against a Broward County man accused of running a Ponzi scheme that bilked as much as $11 million from gay victims, many of them retirees living in Wilton Manors. Federal authorities arrested fugitive George Elia— who had moved from Florida to Cyprus after his alleged scam was revealed— on March 27 as he arrived in Las Vegas, Nevada on a flight from London.

FBI agents arrested Elia on criminal charges of wire fraud stemming from alleged false claims he made to his investors about his track record as a daytrader, and his doctoring of statements to reflect inflated profits. In reality, his trading resulted in marginal gains or losses. The SEC’s complaint says that Elia violated antifraud sections of securities laws and that he aided and abetted these violations by companies of which he was in charge. He faces a maximum 20 years in prison.

In addition to the criminal charges against him, the SEC sued Elia and his company, International Consultants & Investment Group (ICIG), along with other businesses connected to him— 212 Entertainment Club, Inc. and Elia Realty—as relief defendants in federal civil court, alleging “affinity fraud,” a legal term for investment frauds that prey upon certain groups, including the members of religious or ethnic communities, language minorities, and the elderly, as well as LGBT individuals. The perpetrators of affinity scams frequently are—or pretend to be—members of that group.

CYPRUS, GREECE, THE CITY TO WHICH ELIA ABRUPTLY MOVED HIS BELONGINGS

Several of Elia’s alleged victims say that they were introduced to the daytrader by Wilton Manors resident Jim Ellis, although no charges have been filed against him. Elia is said to have met with prospective clients over dinner at expensive restaurants in and around Wilton Manors and Fort Lauderdale. Authorities say that investors were referred to Elia by “word of mouth,” and by relatives and friends of the alleged victims. A large number of these are members of Wilton Manors’ LGBT community.

The 19-page complaint filed by the SEC in the U.S. District Court for the Southern District of Florida alleges that “From March 2005 to January 2012, defendants George Elia and his company, International Consultants & Investment Group Ltd. Corp. (‘International Consultants’), orchestrated a Ponzi scheme in which Elia raised approximately $11 million from approximately 25 investors.”

“Elia’s scheme was, in part, an affinity fraud: a number of the investors were members of the gay community in Wilton Manors, Florida,” the complaint continues. “Elia falsely told investors he had a long track record of day trading stocks and exchange traded funds to yield annual returns as high as 26 percent, and that his trading on behalf of investors was paying quarterly returns of up to 20 percent.”

“However, in fact, Elia’s trading resulted in losses or only marginal gains in limited time periods. Further, he misappropriated millions of dollars of investor funds, so any percentage returns he claimed could not have provided enough profits to pay all investors the returns he claimed. Elia transferred the funds to entities he controlled, including relief defendants 212 Entertainment Club Inc., and Elia Realty Inc. He also used some of the funds to pay personal expenses such as mortgage and car payments, and to pay an associate to introduce him to potential investors to sustain his Ponzi scheme.”

The SEC civil complaint, which was filed in federal court before Elia’s arrest, notes that 67-year-old Elia “until recently resided in Oakland Park, Florida, but is believed to now reside in Cyprus. Elia has never been registered with the [Securities and Exchange] Commission in any capacity.” It also says that Elia’s company, ICIG “has never been registered with the Commission as an investment adviser.” These last two are serious charges in a compliance-heavy industry such as stock trading and other forms of investments with regulatory oversight.

While the U.S. Attorney’s office builds its criminal case against Elia and any possible co-conspirators, the SEC civil suit will seek to recoup moneys that Elia may have achieved through fraudulent means. The SEC’s documents charge that “Elia transferred the funds…in amounts of several hundred or several thousand dollars, sometimes more than once a day, indicating that the transfers were not in exchange for goods or services…”