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The Securities and Exchange Commission (SEC) filed charges against two Maryland companies and their principals for allegedly defrauding around 1,200 investors in a Ponzi scheme.

The defendants, 1st Million LLC and Smart Partners LLC, and their principals, Dennis Jali, John Frimpong, and Arley Johnson fraudulently raised $27 million from unsuspecting investors, according to the SEC in the lawsuit.

Allegations against the Ponzi scheme operators

The Commission alleged that the defendants’ offered and sold purported investment contracts and limited partnership agreements to investors in Maryland, Georgia, Florida, Texas, and other states.

Their victims are mostly African immigrants, health care workers, and Church members whom they promised guaranteed monthly or quarterly returns of around 6% to 42% or a minimum investment of $5,000.  Jali, Frimpong, and Johnson earned the trust of their victims by exploiting their common ancestry and religious affiliation.

In addition, the defendants allegedly falsely claimed that a team of licensed and skilled traders in cryptocurrency and forex will be managing the funds. Jali claimed to be a pastor, an expert trader, and a self-made millionaire.

Additionally, the SEC alleged that the defendants allegedly used unwitting existing investors as agents to vouch for their fraudulent offering or Ponzi scheme.

Furthermore, the defendants allegedly diverted investor fund for personal use and to make Ponzi payments to earlier investors.

In May 2019, the defendants’ Ponzi scheme collapsed and Jali fled to South Africa.

The SEC charged the defendants with violating the antifraud provisions of the federal securities laws. It is seeking permanent injunctive relief, the return of allegedly ill-gotten gains with prejudgment interest, and civil penalties. The SEC also named Access2Assets as a relief defendant, seeking the return of proceeds of the alleged fraud to which it had no legitimate claim.

In a statement, SEC Philadelphia Regional Officer Director Kelly Gibson said, “As alleged in our complaint, the defendants exploited religious affiliations and cultural affinities to gain investors’ trust. We encourage all investors to be on high alert whenever they are offered investments promising low risk and guaranteed returns, including from members of a trusted community.”

The U.S. Attorney’s Office for the District of Maryland filed criminal charges while the U.S. Commodity Futures Trading Commission (CFTC) filed a civil action against the defendants.