Unrelated to PIPS, but interesting
Ponzi scheme snared many
By ERIK SCHWARTZ
Courier-Post Staff
The cause of death for Ponzi-scheme operator Donald M. Greth is no longer a mystery, but the full scope of his "Christian-based" mutual fund remains unknown.
The 50-year-old Lindenwold man overdosed on oxycodone, the prescription painkiller sold under brand names including OxyContin, according to the Camden County Medical Examiner's Office.
He died last Halloween, 10 days after a federal judge froze his assets to stop what federal authorities called an ongoing fraud and a repeat of a Ponzi scheme that led him to jail in the early 1990s.
The alleged Ponzi scheme of 2002-05 is significantly bigger than investigators knew when they filed the civil case against Greth and a Virginia woman with whom he worked, said Catherine E. Pappas, senior trial counsel for the Securities and Exchange Commission.
"It looks like there's people all over," Pappas said. "We have Texas. We have New Jersey. We even have some people in Canada, some people in Massachusetts. It really is throughout the United States."
Using bank records and other documents, the SEC determined that participants contributed "millions" of dollars directly to Greth or through people like defendant Brenda B. Melton, 51, of Upperville, Va., who served as local representatives for the enterprise, Pappas said. She declined to provide a more specific estimate of contributions.
The scheme spread through word of mouth. Greth drew participants -- at least 140, according to court papers -- by promising annual returns of 629 percent and emphasizing his Christianity. He wrote to one, in part:
"We are a Christian based mutual fund and take pride in helping our Christian brothers and sisters achieve financial independence by performing with excellence in today's ever-changing markets and industries."
Many participants were elderly Christians from rural areas, said Patrick J. Artur, Melton's lawyer. "They were his mark. That's how he sold it. You never see the mafioso do this. These people were a little bit ready to believe, and that's how he targeted them."
Pappas said those who lost money may recover some of it. The SEC is seeking repayments from people who profited illegally, including some who played roles similar to Melton's. Artur said the SEC had found "substantial amounts of money" and some participants could be obligated to make restitution of more than $100,000 each.
"There's no guarantee there's going to be any return here," Pappas said. "We're just looking into the possibility that we can recoup some of this money and give it back to investors."
Melton, a homemaker married to a farm worker, probably will be obligated to repay about $20,000 in ill-gotten gains, Artur said.
Her "involvement is minimal with regard to the number of people she dealt with and . . . the actual dollar amount (by which) she's alleged to have enriched herself," Artur said.
Melton, who is cooperating with investigators, is named as a defendant because a Leesburg, Va., woman she recruited complained to the SEC, he said.
"Brenda looked at the outset much more involved than she actually was," Artur said.
A lawyer for Greth's estate could not be reached for comment.
The case, being heard in U.S. District Court in Camden, is expected to take at least 10 more months to resolve.
In 1991, Greth pleaded guilty to securities fraud charges and was sentenced to 21 months in prison for operating a Ponzi scheme.
The scheme started in Pennsauken in 1985 and collapsed in 1988, leading to his flight to Florida. Losses topped $1.5 million, which was the amount of restitution required by his sentence.
Greth admitted defrauding more than 200 people in South Jersey and Montgomery County, Pa.
