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Massachusetts Charges Private Equity Investment Fund with Ponzi Scheme

The Massachusetts Securities Division has charged two men and their company with violating state securities laws and regulations in Massachusetts. Thomas David Renison, Timothy James Allcott, and ARO Equity LLC are alleged to have perpetrated fraud upon their victims by misrepresenting themselves and the nature of the investments.

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The Massachusetts Securities Division has charged two men and their company with violating state securities laws and regulations in Massachusetts. Thomas David Renison, Timothy James Allcott, and ARO Equity LLC are alleged to have perpetrated fraud upon their victims by misrepresenting themselves and the nature of the investments.

According to an administrative complaint, investors were sold unsecured promissory notes, promising 8 percent to 12 percent in annual returns over three to five years. Many investors were convinced to make significant investments from their retirement assets. The two men and their company are also alleged to have used new investor funds to make payments to existing investors.

“With little to no actual return on the fund’s business investments, monthly returns to ARO Equity investors are paid using funds raised from later investors, the classic hallmark of a Ponzi scheme,” the complaint states.

Renison has previously been charged with violations of federal law and the Maine Uniform Securities Act, due to fraudulent activity and conspiracy to commit wire fraud. He was then permanently barred from acting as an investment adviser representative by the Securities and Exchange Commission in 2014.

Despite the ban, the complaint alleges that Renison solicited investments from several of his former clients on behalf of ARO Equity.

Allcott, who runs ARO Equity out of his mobile home in Peabody, Massachusetts, has allegedly taken in more than $5.8 million of investor funds since 2015 and less than $3 million of which was actually invested.

Approximately $2.5 million of the money raised was used to pay commissions to those charged, other fund expenses, or to make purported interest payments to earlier investors.

Payments to Renison were made in the name of immediate family members, in an attempt to conceal his involvement with the company, the complaint alleges. The majority of proceeds that were invested in two business ventures resulted in a near total loss of investor capital.

“This case illustrates how important it is for investors to call my office, so they can learn about who they are dealing with before they hand over their hard-earned savings,” Galvin said. “My priority is to protect all investors, in particular senior investors, from scam artists who prey on people’s retirement funds.”

The complaint seeks a cease and desist order, censure, payment of restitution to investors, and an administrative fine.

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