Judge Orders Repayment in Scheme
A federal judge ordered the head of an investment club billed as a self-help group for blacks and other minorities to pay about $25.8 million in ill-gotten gains, a regulatory agency said Thursday.
Judge Thomas Hogan of U.S. District Court for the District of Columbia last week granted the Securities and Exchange Commission its motion for summary judgment on all of its claims against Robert Taylor and his Better Life Club of America Inc., the SEC said.
The judge held that Taylor and the Washington, D.C.-based club engaged in securities fraud and the unlawful sale of unregistered securities by perpetrating a huge Ponzi scheme called the Better Life Club “Advertising Pool.”
In that pool, “numerous” middle- and working-class people across the country were bilked out of about $25.8 million, the SEC said in litigation papers.
A Ponzi scheme is a fraudulent pyramid-type scheme that involves luring investors seeking high interest-rate returns and using the funds to pay off earlier investors.
According to the litigation release, the judge wrote: “The net effect . . . is that hundreds of middle-class, small-scale investors are left holding losses that exceed $25 million.
“Even with such disgorgement and liability, however, it is uncertain that the investors will ever recoup the full amount of their economic losses,” Hogan said.
The court entered a permanent injunction against Taylor and the club and ordered them to pay civil penalties to a court-appointed receiver for distribution to the defrauded investors, the agency said.
Hogan found that Taylor had raised more than $45 million from investors in the pool between Jan. 1, 1993, and Aug. 31, 1995, promising to double each investor’s money in about 90 days, the regulatory agency said.
Through the club’s so-called wealth-building seminars, publications and other promotional efforts, the investors were told that their money would be used to “advertise Better Life Club 900-lines and to promote other profit-making business activities.”
But what the court found was that almost all of the funds that were going into the club’s accounts were made up of new investments, not of profit from club activities.
Taylor is serving a 41-month sentence in a federal institution in Petersburg, Va.
In July 1996, he pleaded guilty to one count of wire fraud and one count of criminal contempt based on his numerous violations of an asset-freeze order by Hogan to preserve the investors’ funds pending the outcome of the SEC’s civil case.
