Nathanial Ponn, a defendant in ongoing SEC litigation, pled guilty to three counts of wire fraud in connection with orchestrating a three-year fraud scheme that involved hundreds of attempts to defraud various securities brokers. The court accepted Ponn’s plea and scheduled sentencing for March 1, 2017.
The SEC previously charged Massachusetts resident Ponn with engaging in a scheme to defraud numerous unnamed broker-dealers over more than seven years in an action filed on March 31st. Beginning as early as 2007, but escalating in 2014 and continuing into at least April 2015, Ponn defrauded numerous brokerage firms through phony bank transfers to newly opened brokerage accounts.
According to the original complaint, over the course of the scheme, Ponn opened approximately 600 brokerage accounts and attempted to fund them with bogus bank transfers totaling $8.7 million.
Of this amount, broker firms credited Ponn’s accounts for $6.3 million, which he then used to purchase $2.9 million worth of securities. Once the broker firms discovered the fraudulent nature of the bank transfers, they locked Ponn’s accounts, sold off the accounts’ holdings, and ultimately closed the accounts.
The SEC noted that Ponn attempted to withdraw at least $271,000 from these accounts, but the internal control procedures of most firms prevented him from making cash withdrawals before the bank transfers were confirmed. Moreover, his fraudulent securities purchases of approximately $2.9 million caused the broker firms to suffer net trading losses of approximately $26,000, and put them at risk for much more.
The SEC’s litigation against Ponn continues. The SEC’s complaint seeks a permanent injunction plus disgorgement, prejudgment interest, and penalties.