The Securities and Exchange Commission is alleging that a corporate general counsel participated in a Ponzi scheme that targeted naïve investors in ads that sometimes ran on the Rush Limbaugh Show.
The SEC alleged in a civil suit (PDF) that the former general counsel, Atlanta lawyer Marc Celello, approved misleading ads and misleading offering memoranda to sell unregistered promissory notes, report MyAJC.com, the Daily Report (sub. req.) and a press release.
Celello was a partner in Credit Nation Capital and was general counsel for several related companies, according to the suit. Before Credit Nation Capital was ordered to stop raising money, it had raised at least $30 million from sales of the promissory notes with false claims that they were “backed by hard assets dollar for dollar,” the suit says.
Celello had been investigating the CEO of Credit Nation Capital, James Torchia, with the Georgia Secretary of State’s office before he switched sides and represented Torchia, according to my AJC.com. Credit Nation Capital said its promissory notes would generate income in investments in auto loans and life insurance payouts from policies purchased from elderly and terminally ill people.
At the end of 2014, CN Capital had only about $9 million in assets to pay the $30 million in outstanding notes, the suit says.
”Despite the rosy depictions in CN Capital’s offering materials and advertisements,” the suit says, “CN Capital was never profitable, nor were the notes fully secured by hard assets.”
Celello was also accused of using his IOLTA account to route Credit Nation funds to Torchia for his personal use.