DETROIT (WWJ/AP) – A judge has barred a Detroit-area money manager from the investment industry and ordered him to pay more than $4 million.
The government accused Frank Bluestein of raising some of the millions of dollars that flowed to Edward May in a Ponzi scheme. May, a Lake Orion resident, is serving a 16-year prison sentence.
Bluestein says he didn’t know May was deep in fraud. Bluestein has not been charged with a crime, but the Securities and Exchange Commission sued him in 2009.
According to the SEC’s complaint, Bluestein allegedly acted as the single largest salesperson in May’s Ponzi scheme. His role was to specifically target retirees and elderly investors into attending so-called “investment seminars” held in Michigan and California, the complaint alleges. The SEC says Bluestein raised approximately $74 million from more than 800 investors over a five-year period.
“Bluestein convinced elderly investors to refinance their homes to invest in securities that he falsely claimed were safe,” Merri Jo Gillette, Director of the SEC’s Chicago Regional Office, said in a 2009 statement. “His lies, false assurances, and unscrupulous tactics put many investors at risk of losing not only their life savings, but also their homes.”
Federal Judge Sean Cox signed an order Wednesday in favor of the SEC. It’s not clear how Bluestein will come up with $4.4 million. He’s told the judge that he’s broke.
Prosecutors say investors lost more than $35 million with May. They believed they were investing in telecommunications.
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