SEC alleges N.H.-based Ponzi scheme



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A Bedford-based Internet trading corporation is actually a Ponzi scheme run by a Canadian resident who used it to pay off previous investors and build up his Ontario horse farm, according to the U.S. Securities and Exchange Commission.The SEC charges that Henry Roche bilked about 14 investors in nine states out of $1.3 million though the New Futures Trading International Corp. telling them the money would be used to buy high-yield promissory notes purportedly yielding either 5-10 percent per month, or a 200 percent within 14 months. The SEC suit was filed Nov. 16 in U.S. District Court in Concord.The suit alleges that some $937,000 of the money went to pay the interest rates of investors in Roche's other schemes, including Masters Palace Inc. and Third Realm Institute. At least another $359,000 went to Majestic Horses, a horse breeding farm in Ontario, to buy horses and support Roche's lifestyle, according to the suit.U.S. District Judge Joseph N. Laplante issued a temporary restraining order freezing Roche's and New Futures' assets.(The Internet trading company is not affiliated with New Futures, a statewide nonprofit that works against teenage alcohol abuse.)Roche didn't actually own New Futures Trading, but allegedly controlled the business by directing the actions of its vice president and treasurer, Ryan Fontaine, a former student, the SEC says.Roche named his wife Emilia Elnasin (also known as Lian Roche) as a shareholder and officer, according to the SEC. Elnasin's name was allegedly on some of the documents. But Roche had blank New Futures checks that he could "use for any purpose" and "retained de facto control over the operation," according to the SEC.According to New Futures' filings at the New Hampshire Secretary of State's office, Fontaine lived in Bow when the company was formed in 2010. He was first listed as vice president and treasurer, and then as secretary.The SEC did not charge Elnasin or Fontaine in the case, but in 2002 it did file suit against a Ryan J. Fontaine - then a 22-year-old college student in Michigan -- and his related company, Simpleton Holdings Company (aka Signatures Investments Hedge Fund) in November 2002. The suit was filed in U.S. District Court in Manhattan.That complaint alleged that Fontaine sold shares over the Internet by falsely claiming that Signature averaged a 39.5 percent annual return, had $250 million under management, used Salomon Smith Barney as a sub-adviser and KPMG LLP, as an auditor, the SEC alleged. Fontaine, however, made all this up, according to the complaint.The court ruled that Fontaine was liable for $40,000.It's not clear whether that is the same Fontaine involved in New Futures.Fontaine could not be reached by deadline at his Bow home. An attempt to reach Henry Roche through his New Futures Trading email address was also unsuccessful.While most of the instances of alleged fraud are under seal - presumably to protect the identities of the victims - there is one affidavit filed by a Boston paralegal based on an interview with an Illinois gynecologist who was persuaded in January by email promoting the "WILDLY successful POWER of DIRECTION" inviting him to attend a Roche seminar.Convinced, the doctor plunked down $7,000 for lifelong coaching, according to the affidavit. Later that month, Roche allegedly approached the doctor by telephone, telling him that he had a single opening in an investment that could result in 200 percent return, the affidavit says.The doctor then handed over $50,000, but felt something was wrong when he attended a New Futures seminar in March and learned that others had also filled that single opening, according to the affidavit. He declined to invest further, and after the New Futures website went down in October 2011, the doctor was contacted by investigators from the New Hampshire Bureau of Securities Regulation. That's when he sent documents to state investigators. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW

 

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