Meyer Wilson's Investigation into the KGTA Investment Scam Continues as the SEC Files a Lawsuit in Ohio to Shut Down the Ponzi Scheme
The investment fraud attorneys at Meyer Wilson have been investigating claims involving the investment scheme of KGTA Petroleum, Ltd. ("KGTA") scam for several months. The firm's first client in this case hired us back in April. Our initial blog we posted at that time can be found here: Potential Recovery for Ohio Victims of KGTA Petroleum, LLC Investment.
Just last week, the SEC filed suit against several parties involved in the alleged fraudulent investment scheme of KTGA. You can read the Complaint here. Among the parties named were the company's owners, Ken Grant and Tom Abdallah, and two registered representatives, Jerry Cicolani and Jeffrey Gainer of Primesolutions Securities, Inc., a Cleveland-based broker-dealer. Our law firm has handled more than 60 cases involving Mr. Cicolani over the past 10+ years.
The SEC alleged that KGTA was sold to investors through Cicolani and Gainer as a company that earned profits by buying and reselling crude oil and refined fuel products. Cicolani and Gainer found investors for KGTA, set up meetings, relayed information, and obtained investor funds on behalf of the company. The two brokers allegedly reaped massive fees by selling the fraudulent and unregistered investments. Between 2012 and 2014, KGTA raised over $20 million. Of that, according to the SEC Complaint, Gainer earned approximately $2 million in fees, and Cicolani earned over $4 million.
Investors were reportedly told that returns would be fixed and guaranteed from 2%-4% monthly and 24%-48% annually, with no market risk, and that their principal could be withdrawn at any time. As a procedural safeguard, investors were promised that the investment funds and returns would flow through an escrow account monitored by an independent attorney. The attorney was also named as a defendant in the suit.
According to the SEC, KGTA did not generate any revenue through the purchase and resale of oil products. Investor funds were not held in escrow, and KGTA used funds from new investors to pay fake returns to old investors. We believe that KGTA, in reality, is nothing more than a Ponzi scheme. The SEC requested from the court, and was granted, an asset freeze for what funds may be left.
Many victims of the KGTA scam who have lost millions of dollars have contacted our law firm over the past several months. If you or someone you know lost money in the KGTA Ponzi Scheme, please contact managing partner David P. Meyer directly for an update on our investigation at 888-390-6491 or firstname.lastname@example.org.