One week after Cazenovia businessman James P. Griffin was arrested by the U.S. Attorney’s Office and indicted on a $1.6 million scheme to defraud investors since 2009, he has also been charged by the federal Securities and Exchange Commission for defrauding investors, many of them upstate New York residents, who purchased the companies’ securities and so-called “charitable gift annuities.”
According to the SEC’s complaint filed in U.S. district court in Syracuse, the alleged scheme raised at least $8 million from 125 or more investors in shares and promissory notes issued by the companies over more than seven years, starting in 2007.
The complaint names Griffin, the founder and CEO of 54Freedom Inc., both of Cazenovia, and James Wolle, 54Freedom’s Chief Financial Officer and Treasurer. Six other Cazenovia-based firms also were named in the complaint: 54Freedom Securities Inc., MoneyIns Inc., 54Freedom Foundation Inc., 5 Ledyard Ave. LLC, 5 Ledyard Corp., IICNet LLC, and Miami-based 54FreedomTele Inc.
In a parallel criminal action, the U.S. Attorney’s Office for the Northern District of New York announced on July 24 that it had arrested Griffin on charges of fraud and money laundering related to the “charitable gift annuities.”
The SEC’s complaint alleges that Griffin and Wolle repeatedly misled prospective investors regarding the companies’ prospects, for instance, falsely claiming that they had an exclusive relationship with Lloyd’s of London and that they would publish a soccer book affiliated with the “Chicken Soup for the Soul” series.
In addition, Griffin is alleged to have sold purported “charitable gift annuities” that he falsely claimed were backed by reputable insurance companies and to have diverted at least $1.2 million of investor funds to pay for corporate and personal expenses, including a large boat, luxury cars, expensive clothing and jewelry, country club memberships and trips he and his wife took to Hawaii and New Zealand, according to the complaint.
“We allege that Griffin and Wolle picked numbers out of thin air and even guaranteed projections to purchasers of the securities while taking undisclosed sums for themselves,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.
The SEC’s complaint charges Griffin, Wolle and the eight companies with violations of the antifraud and registration provisions of the securities laws. It also names Griffin’s wife, Chary Griffin, as a relief defendant for the purpose of recovering allegedly misappropriated investor funds. A relief defendant is a person or entity who has received ill-gotten funds or assets as a result of the illegal acts of the other named defendants
According to the complaint, Chary Griffin received approximately $120,000 of 54Freedom’s defrauded investors’ money through checks written directly to her from 54Freedom bank accounts. In addition, investor money was used to pay credit card bills in Chary Griffin’s name and travel expenses for trips that she and her husband took, according to the complaint.
The complaint seeks to “permanently” restrain the defendants from “violating the laws and rules alleged in this complaint,” orders that the defendants and the relief defendant “each disgorge any and all ill-gotten gains they have received as a result of their violations of federal securities laws” plus interest, and orders the defendants to pay civil money penalties.
Jason Emerson is editor of the Cazenovia Republican. He can be reached at [email protected].
