U.S. SECURITIES AND EXCHANGE COMMISSION
Lit. Release No. 21931 / April 15, 2010
United States of America v. Richard Elkinson (United States District Court for the District of Massachusetts Criminal No. 1:10-cr-10051-JLT)
Securities and Exchange Commission v. Richard Elkinson, 10-CV-10015-JLT (D. Mass. January 7, 2010)
PONZI SCHEMER ELKINSON PLEADS GUILTY
The Securities and Exchange Commission (“Commission"), announced today that on April 13, 2011, Richard Elkinson, age 77, of Framingham, Massachusetts, pled guilty to 18 counts of mail fraud in a case being prosecuted by the United States Attorney’s Office in Boston, Massachusetts. These charges resulted from Elkinson’s operation of a scheme by which he defrauded more than 100 victims of millions of dollars. Elkinson was indicted on February 17, 2010. The indictment charged that Elkinson obtained funds from his victims by falsely representing that he would use the funds to finance the manufacture of uniforms and hats for state government agencies when in fact he used the funds for his own personal purposes and to repay amounts to other victims. He is currently scheduled to be sentenced before U.S. District Joseph L. Tauro on July 21, 2011.
The Commission previously filed a related civil enforcement action against Elkinson on January 7, 2010 and obtained a default judgment against him on June 9, 2010. In the Commission’s action, the court permanently enjoined Elkinson from future violations of the antifraud and registration provisions of the federal securities laws and ordered him to pay over $29 million in disgorgement, prejudgment interest and civil penalties. On January 7, 2010, at the Commission’s request, the court had issued an order freezing Elkinson’s assets.
The Commission alleged in its complaint that Elkinson operated a Ponzi scheme that defrauded at least 130 investors from multiple states of approximately $28 million. The complaint further alleged that since at least 1997, Elkinson offered and sold unregistered securities in the form of promissory notes. According to the complaint, Elkinson falsely told investors that he was in the business of brokering contracts on behalf of a Japanese firm that manufactured uniforms (such as police uniforms and prison uniforms) to be sold to large purchasers such as state and local governments (and even the U.S. Olympic Committee) and that investors’ money would be used to help finance specific uniform contracts. The investors received promissory notes signed by Elkinson, with terms that generally required payment within 300 to 330 days and with an interest rate that ranged from 9% to 13%. According to the complaint, however, Elkinson had no relationship with a Japanese uniform manufacturer, and there were no contracts to purchase uniforms. The Commission alleged that, while some investors did receive payments of principal and interest, those payments were made using funds obtained from other investors, and Elkinson was able to keep the scheme going as long as most of the investors kept rolling over their investments. In reality, according to the complaint, Elkinson used most of the investors’ money for his own personal purposes, including gambling.
For further information, please see Litigation Release No. 21364 (January 8, 2010) [Order obtaining preliminary injunction, asset freeze, and other relief as to Elkinson] and Litigation Release No. 21553 [$29 million judgment entered against Elkinson].