"Ninety-nine percent of cases we see are caused by unregistered investments or investment advisors. The best thing investors can do is check with our website or call our office to make sure the investment is registered and the person they are dealing with is registered."
- Indiana Secretary of State
An Indiana attorney and his daughter have been arrested and charged with masterminding a $23 million Ponzi scheme that allegedly targeted senior citizens. Charles Blackwelder, 69, and his daughter, Cara Grumme, 41, were charged by Indiana authorities with twenty felonies, including nine counts of fraudulent sale of securities and four counts of securities fraud on a victim over 60. Each of the felonies carry at least a four-year minimum sentence. Blackwelder remains in an Indiana jail where he is being held on a $500,000 bond.
According to the Indiana Secretary of State, Blackwelder operated CFS LLC ("CFS") in Carmel, Indiana, as an unregistered company that offered investors an opportunity to purchase "real estate investment opportunities" that would allegedly operate as a legal shield of those assets from consideration for qualification for Medicaid. In total, the company took in over $23 million for over a decade from several hundred Indiana investors - many of them senior citizens.
However, Indiana authorities allege that CFS was nothing more than a Ponzi scheme, using new investor funds to pay returns to existing investors. While investors were told that they were purchasing undivided interests in properties, authorities allege that in, in reality, the subject real estate was either previously sold or had already entered foreclosure. In addition, Blackwelder and Grumme were accused of using several of the properties for their own use.
The Indiana Secretary of State Securities Division filed an enforcement action last year against Blackwelder, his son Chad, and Grumme related to their ownership of CFS Inc. While A receiver was appointed, with over $23 million in claims filed by investors and debtors. According to the receiver, CFS Inc. may have oversold interests in its properties by as much as 48%.
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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