SEC accuses two firms of Ponzi scheme
A Los Angeles federal judge barred a Pomona man and his two companies, Ben-Wal Leasing Co. and Ben-Wal Management Inc., from doing business in response to a complaint alleging investor fraud filed by the Securities and Exchange Commission.
The civil complaint said the two firms, run by Jerry E. Benson, ran a Ponzi scheme that took in nearly $6 million from about 125 investors, many of them elderly, who lived in mobile home parks throughout California.
The court ordered a halt Wednesday to the alleged fraud and froze the assets of Benson and his Ben-Wal companies.
Benson’s lawyer, J. Brian Watkins, said in a statement that Benson “has and will continue to cooperate with the SEC’s efforts to recover investor funds.”
“Though cooperating with the SEC, Mr. Benson disputes any allegations of fraudulent conduct and notes that the continuing shift from print to electronic media combined with the economic downturn resulted in a failure of the business,” Watkins said.
In the complaint, the SEC said Benson had been offering and selling investments in Ben-Wal Leasing since about 1990. Investors were lured with guarantees of 12% annual returns on promissory notes, and Benson told potential investors that others had earned returns as high as 18%, the commission said.
Ben-Wal Leasing raised at least $5.7 million from about 125 investors from 2004 to April of this year, court documents said. Mobile home parks throughout the state were specifically targeted with advertisements, the complaint said.
Investors were falsely told that no one had ever lost money through Benson and that their money would be used to buy printing equipment that would be leased out with the lease payments producing the promised 12% returns, the commission said.
Instead, much of the funds were transferred to a company owned and operated by Benson’s son, Scott W. Benson, known as CTR Web Printing Inc., court documents alleged.
CTR Printing was the only company leasing printing equipment from Ben-Wal Leasing, and it failed to make regular lease payments, the complaint said.
New investor funds were used to make principal and interest payments to other Ben-Wal Leasing investors in a Ponzi scheme, the commission said.
In May 2009, Benson and Ben-Wal Leasing received a desist-and-refrain order issued by the California Department of Corporations.
The order demanded that the man and his business stop offering or selling securities in California in violation of state law.
The SEC’s complaint said that Ben-Wal Leasing stopped making interest payments to investors in June 2009, but that Benson then started a new company, Ben-Wal Management Inc., to continue selling notes.
The court order also froze the assets of CTR Printing and appointed a temporary receiver over the two Ben-Wal companies and CTR.
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nathan.olivarezgiles@ latimes.com
