Four People Indicted in $40-Million Ponzi Scheme

Four people have been indicted on charges of running a fraudulent $40-million oil and gas investment scheme that targeted the elderly, federal prosecutors announced Friday.

More than 1,500 investors were promised 10% annual returns on their investments in limited partnerships created and promoted by three Beverly Hills companies, KS Resources, Weststar Exploration and Lazar Frederick & Co., according to the indictment.

Although KS Resources actually held interests in oil and gas properties, the indictment said the revenues generated were not enough to cover the returns promised to investors.

The U.S. attorney’s office said the defendants engaged in a classic Ponzi scheme in which money from new investors was used to pay dividends to previously recruited investors.

Named in the 40-count indictment were principals in the three firms, Mark D. Siegel, 50, of Westlake Village; Alexander Lazar Kahan, 46, of Los Angeles; John K. Judd, 41, of Manhattan Beach; and Betty Ann Rubin, 51, of Woodland Hills.

They were charged with securities fraud, mail fraud and money laundering and are to appear before a federal magistrate Wednesday.

Lawyers for Siegel, Kahan and Rubin said their clients are innocent and plan to fight the charges. Judd’s attorney could not be reached for comment.

In 1995, the defendants were sued by the Securities and Exchange Commission in connection with the same investment scheme. Without admitting or denying any wrongdoing, they settled that case by promising to disgorge millions of dollars they took in from investors.