SEC Charges Adam Brothers, GCZ Global and Triten Financial Group with a $60 Million Ponzi Scheme
The U.S. Securities and Exchange Commission halted another alleged Ponzi scheme, this one perpetrated by two brothers who lured investors with the promise of up to a 13.5 percent monthly return on investment on a crypto asset arbitrage trading scheme.
On August 26, the SEC filed a complaint in the U.S. District Court for the Northern District of Georgia against Jonathan Adam, of Angleton, Texas, and his brother Adam Tanner of Miami, Florida, and their respective companies GCZ Global, LLC, and Triten Financial Group, LLC, and was granted an emergency asset freeze by the courts.
In the complaint the SEC alleges that from January 2023 to June 2024 the brothers “falsely told investors that Jonathan Adam had created a bot that operated on a crypto asset trading platform to identify arbitrage trading opportunities, and that investor funds would be used in a lending pool that would, through smart contracts, fund flash loans to complete these arbitrage trades.”1
According to the SEC, the lending pool, as it was described to investors, did not exist.
Rather, investor funds were used to fuel the Adam brothers’ lavish lifestyles, with new investor funds used to pay existing investors.
Investor funds were allegedly used to make payments on a $30 million condominium for Tanner Adam, with over $1.8 million used to build houses in Texas for Jonathan Tanner and his relatives, and $480,000 used to purchase cars, trucks and recreational vehicles for Jonathan Adam. As of June 2024, less than $400,000 in investor funds remained in bank accounts controlled by the Adam brothers.
The SEC alleges in the complaint that “of the $65.1 million of investor funds raised at least $53.9 million was either misappropriated or used to pay interest, pay finders fees, and return principal to existing investors.”2
This $60 million Ponzi scheme, which affected more than 80 investors, contained many of the warning signs of a bad investment. A high rate of return was promised. The perpetrators exploited the excitement around a new technology and presented investors with a trading scheme which would be difficult for most investors to fully understand. Investors were also told that short of a global market meltdown, invested funds were safe.
Perhaps the biggest red flag warning was that investors could have checked Jonathan Adam’s background. He had never held any securities licenses and had, in fact, served over four years in prison for three felony convictions related to securities law violations including securities fraud, engaging in business as a broker-dealer or agent without registration, and unlawful sale of unregistered securities.3
In addition to receiving the emergency asset freeze, the SEC is asking the Court for permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants.
Diligence in Securities Litigation Protecting Investors
It’s critical to have proper representation when fighting four your rights. Our Securities Law Firm located in the Detroit Metro area has been ardently fighting for investor’s rights for more than 20 years. An experienced Securities Attorney can help defrauded individuals recover their losses and hold negligent brokers accountable. If you think your investment accounts have been compromised or mismanaged, contact our Michigan Securities Law Firm today and speak with an attorney.
___________________________
1 Press Release: SEC Charges Brothers Jonathan and Tanner Adam with $60 Million Ponzi Scheme, 8/26/2024
Link: https://www.sec.gov/newsroom/press-releases/2024-107?utm_medium=email&utm_source=govdelivery
2,3 SEC Complaint, 8/26/2024
Link: https://www.sec.gov/files/litigation/complaints/2024/comp-pr2024-107.pdf