Financial elder abuse does not always involve the outright theft of an older person’s money. It can also arise when trusted financial professionals place elderly clients’ savings and retirement funds into investments that are inconsistent with their objectives and risk tolerance, or fail to fully disclose the risks those investments pose.

Material misrepresentations, omissions, and misuse of investor funds can give rise to securities fraud liability, regardless of the industry in which the offering occurs.

The intersection of affinity fraud and Ponzi schemes is a recurring theme in securities enforcement. Although each theory is distinct, they frequently appear together in SEC enforcement actions.

In today’s article, we examine the SEC’s enforcement action against Wisdom Capital Management Group Ltd., an entity that claimed to be an Exempt Reporting Adviser (“ERA”) under the Investment Advisers Act of 1940 (“Advisers Act”). While ERAs are exempt from SEC registration, they remain subject to the SEC’s examination authority and must provide accurate, verifiable disclosures.

On June 5, 2026, the SEC charged an investment adviser and related entities with a multi-year fraud involving a pooled investment fund that raised about $4 million from 28 investors. The SEC alleged the defendant misappropriated and commingled funds, concealed losses exceeding $3.6 million, and diverted assets for personal use.

Affinity fraud is a form of financial fraud that relies on social connections and trust. It most often occurs within identifiable groups, such as religious, cultural, or ethnic communities, or social organizations, where members share common values, experiences, or identities. Rather than approaching targets as strangers, those promoting the scheme position themselves as insiders, using familiarity and perceived credibility to create comfort and reduce skepticism.

Financial abuse of seniors and other vulnerable adults is among the most damaging and the least visible forms of investor harm. It arises when age, illness, cognitive decline, or dependence on trusted professionals erodes an individual’s ability to evaluate advice or resist coercion, even while legal capacity nominally remains intact.

By: Jeffrey M. Haber Financial exploitation of seniors and vulnerable adults is a significant problem.¹ It is considered by many to be an insidious non-violent form of elder abuse in the United States. While a landmark MetLife study initially estimated that older Americans lose roughly $2.6 to $2.9 billion each year to financial exploitation, more recent research suggests that the cost may be materially higher, potentially exceeding $36 billion annually. These numbers, whethe

Ponzi schemes and affinity fraud frequently overlap because both exploit trust and social interactions to operate effectively.

On August 1, 2025, the Securities and Exchange Commission (“SEC”) announced (here) that it charged a Wisconsin resident and three limited liability companies that he owns and controls – Investors Capital LLC, Global Investors Capital LLC, and High Income Performance Partners LLC (collectively, the “Entity Defendants”) – with perpetrating a real estate-related offering fraud.

The Custody Rule provides that “it is a fraudulent, deceptive, or manipulative act, practice or course of business within the meaning of section 206(4) of the [Advisers] Act … for [a registered investment adviser] to have custody of client funds or securities unless” the adviser implements an enumerated set of requirements to prevent loss, misuse, or misappropriation of those funds and securities.

On June 26, 2025, the Securities and Exchange Commission (SEC”) announced (here) that it charged a Manchester, New Hampshire resident, a real estate investment coach and real estate investment coach, with defrauding investors through real estate investment schemes resulting in losses of at least $3 million.

Today, we examine an enforcement action brought by the SEC involving a Ponzi-like scheme that targeted retired senior citizens that the defendant met through his church community

The allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading served as the underlying predicate for the claims asserted by the Securities and Exchange Commission (“SEC”) against Ramil Palafox (“Defendant”), the founder of Praetorian Group International Corporation (“PGI Global”), a now-defunct entity he controlled, in S.E.C. v. Palafox, Case 1:25-cv-00681 (E.D. Va. 2025). The case marks the first crypto enforcement action under the new Chairma

A Ponzi scheme is intended to give investors the false impression that their investment is profitable. In a Ponzi scheme, the fraudster/promoter pays early investors with money that the investor believes is the return on his/her/its investment. In actuality, the money used to pay the investor comes from the investor’s own principal investment dollars or the pooled investment dollars of subsequent investors.

By: Jeffrey M. Haber Last year, this Blog wrote a number of articles about the Securities and Exchange Commission’s (“SEC” or the “Commission”) efforts to stop companies from impeding whistleblowers from reporting violations of the securities laws to the Commission. (See here, here, and here.) It looks like 2017 is picking up where 2016 left off. Last week, the SEC announced the settlement of two enforcement actions (here and here) against companies that impeded protected whi

By Jeffrey M. Haber On January 23, 2017, the SEC announced that it awarded more than $7 million to three whistleblowers who came forward with information that led to a successful SEC enforcement action. One whistleblower provided information that the SEC considered to be the primary impetus for the start of the Commission’s investigation. Consequently, the SEC awarded more than $4 million to that whistleblower. The other two whistleblowers split more than $3 million for joint

By Jeffrey M. Haber On January 6, 2017, the SEC announced that it awarded $5.5 million to a whistleblower who came forward with information that led to a successful SEC enforcement action. The whistleblower is the 38th relator to receive an award under the SEC whistleblower program. In total, since 2011, the SEC has paid approximately $142 million to whistleblowers who provided information resulting in the collection of monetary sanctions against violators of the securities l

By Jeffrey M. Haber On December 22, 2016, the Department of Justice (“DOJ”) announced that Teva Pharmaceutical Industries Ltd. (“Teva”), the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary, Teva LLC (“Teva Russia”), agreed to resolve criminal charges and to pay a criminal penalty of more than $283 million for violating the Foreign Corrupt Practices Act (“FCPA”). The charges relate to various schemes involving the briber

By: Jeffrey M. Haber The Securities and Exchange Commission (“SEC” or “Commission”) has put a lump of coal in the Christmas stockings of two companies this week for using separation agreements that impede the ability of whistleblowers to report violations of the securities laws to the Commission. The announcements by the SEC (here and here) came within a day of each other and evidence a continued resolve by the Commission to crack down on companies that use severance agreemen