The U.S. Securities and Exchange Commission (SEC) has announced charges against Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner, all residents of the Dallas-Fort Worth area, for operating a Ponzi scheme that defrauded more than 200 investors out of at least $91 million.
According to the SEC’s complaint, the scheme ran between May 2021 and February 2024, with Alexander and Welsh orchestrating the fraud through a trust controlled by Alexander, known as the Vanguard Holdings Group Irrevocable Trust (VHG).
“guaranteed monthly returns of between 3% and 6%”
They falsely promised investors guaranteed monthly returns of between 3% and 6%, and assured them their principal investments would be returned after 14 months. The SEC alleges that Alexander and Welsh falsely presented VHG as a highly profitable international bond trading business with billions in assets, claiming that the returns were derived from international bond trading activities.
In addition, Caedrynn E. Conner is accused of funneling over $46 million in investor funds into VHG through a related investment program he operated under the Benchmark Capital Holdings Irrevocable Trust (Benchmark), which he controlled. The SEC alleges that Alexander, Welsh, and Conner also offered a purported financial instrument called a “pay order” to investors, which they falsely claimed would protect their investments from loss. In reality, the SEC asserts that VHG had no legitimate source of revenue, the promised monthly returns were simply Ponzi payments, and the “pay orders” were illusory.
Furthermore, the SEC claims that Alexander and Conner misappropriated millions of dollars for personal expenses, including Conner’s purchase of a $5 million home.
“As we allege, the defendants conducted a large-scale Ponzi scheme that caused devastating losses to investor victims, while Alexander and Conner misappropriated millions of dollars of investor funds,” said Sam Waldon, Acting Director of the SEC’s Division of Enforcement. “We remain unwavering in our commitment to hold individuals accountable for defrauding investors.”
The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Texas, charges the defendants with violations of the antifraud and registration provisions of federal securities laws. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against each defendant.