Court Freezes Assets of Man Accused of Scam

A Coto de Caza man accused of raising $5 million for a bogus mutual fund consented Thursday to a federal court order freezing his assets and halting him from further securities fraud violations.

William Madon, 64, allegedly ran a Ponzi scheme, paying interest to earlier investors from some of the funds solicited from later investors, according to a Securities and Exchange Commission lawsuit filed this week. He operated as Capital Growth Group.

The SEC accuses Madon of selling shares in his mutual fund to 250 people nationwide from 1993 to earlier this year, saying he managed a $46.7-million portfolio when no such fund existed.

Madon and his lawyer could not be reached for comment.

Most of the money raised is gone, said James A. Howell, an SEC attorney. The asset freeze gives Madon access to only $2,700 while the agency values the rest of the holdings and determines how much it can raise in selling the assets and how much Madon will be obligated to repay.

Howell said the case is the second in the last six months involving phony mutual fund sales. In August, the agency closed a Las Vegas operation called American Growth Capital Corp., which raised $7.3 million from investors.