U.S. Securities and Exchange Commission
Litigation Release No. 21537 / May 27, 2010
Securities and Exchange Commission v. GTF Enterprises, Inc., Gedrey Thompson, Dean Lewis, and Sezzie Goodluck, Civ. No. 10-CV-4258 (SD.N.Y.) (May 26, 2010)
SEC CHARGES MONEY MANAGER AND TWO ASSOCIATES IN NEW YORK CITY-BASED AFFINITY FRAUD
On May 26, 2010, the Securities and Exchange Commission today charged a purported money manager, his New York City-based investment company, and two of his associates with conducting an affinity fraud and Ponzi scheme that specifically targeted investors living in the Caribbean and African-American communities of Brooklyn.
The SEC alleges that Gedrey Thompson, through his firm GTF Enterprises Inc., convinced investors to entrust him with money that he claimed to trade on their behalf. Thompson assured investors that the investments were risk-free and employed "stop-loss" trading techniques, and he guaranteed quarterly returns ranging from 4 to 20 percent.
However, Thompson allegedly invested only a fraction of investor funds and sustained thousands of dollars in trading losses from those investments. He sent investors fake quarterly account statements that hid those losses and instead showed lofty returns. Thompson also made Ponzi-like payments to earlier investors, and he stole thousands of dollars in investor funds to pay for exotic trips and other personal expenses. GTF's account manager Dean Lewis and assistant treasurer Sezzie Goodluck also are charged in the fraud that caused many investors in GTF to lose their life savings.
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, Thompson with assistance from Lewis and Goodluck raised a total of more than $800,000 from at least 20 investors from at least 2004 to 2009. Thompson primarily sought investors who were likewise from the Caribbean and now living in the New York area, convincing them to entrust him with their money that he claimed to trade on their behalf in options, futures, commodities, or other securities.
The SEC alleges that Thompson and Lewis made a number of false or misleading representations to con investors. For example, they claimed that GTF practiced sound and careful investing and assumed all trading risk. They also falsely represented that key GTF personnel had extensive experience with Wall Street's top financial firms. Thompson himself boasted false trading qualifications and misstated GTF's success as an investment company.
According to the SEC's complaint, Lewis solicited and obtained approximately $170,000 in investments from at least five investors and obtained $29,000 in commissions from the fraud. Goodluck, a J.P. Morgan Chase Bank employee in Brooklyn at the time, recruited at least two Chase customers to invest in GTF without disclosing those outside activities to Chase. Goodluck personally obtained approximately $78,000 of the investors' funds from GTF's Chase account and provided Thompson with cash from the same account to pay some of his personal expenses, including exotic trips for him and his girlfriend, private school tuition for his son, and meals at restaurants. By 2009, Thompson had dissipated all of the funds that investors had invested in GTF.
The SEC charged Thompson and GTF with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; GTF with violating Section 7(a) of the Investment Company Act of 1940 ("Company Act"); Thompson with violating Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 ("Advisers Act") and Rule 206(4)-8 thereunder; Lewis with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; Lewis and Goodluck with violating Sections 206(1), 206(2), and 206(4) of the Advisers Act and Rule 206(4)-8 thereunder; and Goodluck with aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Commission seeks to enjoin each defendant from future violations of these provisions along with monetary relief and certain other sanctions.