CINCINNATI -- A Symmes Township man is expected to plead guilty in Atlanta next week to federal charges that he participated in a $35 million Ponzi scheme shut down by the U.S. Securities and Exchange Commission in 2012.
Mark Morrow, a former Ohio manager for Atlanta-based Summit Wealth Management, was indicted in 2015 on 13 counts alleging Morrow and a business partner defrauded investors between 2004 and 2012. Morrow’s former partner, Angelo Alleca, pleaded guilty to two conspiracy counts last May and faces up to 20 years in prison.
“Instead of fulfilling promises of investments, investors were largely swindled out of their money in a Ponzi scheme which directly enriched Alleca,” said U.S. Attorney John Horn in a press release announcing Alleca’s plea. “This case serves as another reminder that investors need to be careful, and do their research when deciding who to trust with their hard-earned money.”
Morrow said government filings and press releases are “not an accurate portrayal of what happened.” He added that no Cincinnati investors were involved in the alleged fraud, but declined further comment on the advice of his attorney.
U.S. District Judge Leigh Martin May has scheduled an April 27 hearing to consider a plea agreement for Morrow, who allegedly sold ownership stakes and promissory notes in a Michigan company that told investors it would use the money to acquire cemeteries. Instead, the indictment alleges note proceeds were used to pay for “vacations, property renovations and living expenses” along with interest and redemption requests to Summit investors.
Court records indicate Summit operated as a hedge fund with more than 2,000 clients and close to $1 billion in assets. Initially, it told investors that it was operating a “fund of funds” that wouldn’t invest directly in stocks but would instead buy shares in professionally managed portfolios. But the SEC concluded otherwise when it received a tip about Summit and investigated the company.
“Rather than fess up about his trading losses, Alleca tried a cover up by creating new funds,” said Bruce Karpati, Chief of the SEC Enforcement Division’s Asset Management Unit, in a 2012 press release. “Instead of winning back the money, he just compounded his fraud by suffering further losses.”
Alleca remains free on bond. His sentencing has been delayed until Morrow's case is resolved.
The case has produced two receiverships in which Summit assets are being distributed to victims of the fraud. The Summit Wealth Management Receivership is “finalizing a plan of distribution,” according to a March 15 court filing.
The Detroit Memorial Partners Receivership, which covers investors in the failed cemetery company, has accepted more than $7 million in claims from investors who are expected to recover about 68 percent of their losses.