SEC charges Florida consultant to government agencies with ponzi scheme

WASHINGTON, D.C. (BNO NEWS) -- The Securities and Exchange Commission (SEC) on Friday announced that it obtained an asset freeze against a Jacksonville, Florida firm that defrauded active and retired government employees and law enforcement agents nationwide through a Ponzi scheme.

The estate of the recently deceased Kenneth Wayne McLeod, his consulting firm, Federal Employee Benefits Group, Inc. (FEBG), and his registered investment adviser, F&S Asset Management Group, Inc. were charged with fraudulently soliciting government employees to invest in a government bond fund that didn't exist.

McLeod raised at least $34 million since 1988 from an estimated 260 investors around the country.

The SEC said he used the investors' retirement savings to conduct a Ponzi scheme, to pay himself, and to pay for lavish entertainment, including annual trips to the Super Bowl for himself and 40 friends.

McLeod explained to several investors that the fund invested in government securities provided a 13 percent return and misrepresented that he used the three to five percent spread to expand FEBG and his other businesses, but the investors' principal would remain untouched.

To perpetuate the scheme, McLeod told investors that their principal would be locked up for various periods of up to eight years, supposedly due to the long term nature of the funds' underlying bonds. He also issued some investors false FEBG Bond Fund account statements, which showed fake interest earnings.

Furthermore, he gave investors the option to reinvest their quarterly interest earnings rather than receive distributions, which many investors did.

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