According to a complaint filed by the SEC, from 2010 to at least December of 2012, defendants Joseph Andrew Paul, John D. Ellis, Jr. James S. Quay and Donald H. Ellison operated a fraudulent scam that fleeced unsuspecting investors of millions. Ellis and Paul created Paul-Ellis Investment Associates (PEIA) in Pennsylvania in 2009 and registered as an investment advisor with the SEC.
The foursome told potential investors they managed $164 million in client assets when that was far from reality. Of course they promised outsized returns with some material claiming annual returns ranging from 8.51% to over 56%.
Allegedly Paul and Ellis recruited Quay and Ellison to assist with the scheme. Quay, a disbarred attorney, had prior experience in breaking the law having been convicted of felony charges on tax fraud. Quay used an alias, “Stephen Jameson” to conceal his true identity.
So how did they steal from the innocent? Reportedly they falsely claimed a successful track record of investing and created bogus material to help substantiate the claim. The fabricated track record was backed up by free dinner seminars where the gullible were lured in. Following each free dinner event, PEIA would schedule individual consultations and the con was on.
Where did the money go? It paid for personal expenses, lawyer fees, margin calls. The majority of investors lost all of their money.
“As we allege in our complaint, a large portion of the money was never invested but instead was split among these self-described investment experts whose only real expertise was stealing other people’s money,” said Sharon Binger, Director of the SEC’s Philadelphia Regional Office.