After pleading guilty last year to one count of wire fraud, a former Santa Clarita Valley CEO was sentenced to 33 months in federal prison in connection with a Ponzi scheme he ran.
Scott Allensworth, 68, of Santa Clarita, is said to have used his company Capital Growth Group Associates, or CGGA, to defraud dozens of investors and clients out of $2.3 million between Nov. 2015 and March 2017 after promising them up to 20% in monthly returns on their money.
Allensworth reportedly worked in tandem with David Weddle, 66, who managed JustInfo LLC, a private investment fund, out of his home in Kentucky.
“Allensworth and Weddle solicited money – to be invested with CGGA and Weddle – from victim-investors, who included Allensworth’s clients,” read a statement from the Central District of California U.S. Attorney’s Office regarding the sentencing. “These clients trusted him based on their prior relationship with him, and recommended Allensworth to their friends and family members, who also became victims of the scheme.”
The sentencing issued on Thursday in a U.S Central District of California courthouse is in addition to Allensworth, Weddle and JustInfo being ordered in 2018 by the Security and Exchange Commission to pay more than $300,000 in civil penalties.
In March of last year, Weddle also pled guilty to one count of wire fraud, and he is currently serving a 41-month prison sentence in connection to his criminal activity.
In 2017, The Signal reported that Allensworth had run his business on Springbrook Avenue and, together with Weddle, had defrauded at least 57 investors by selling investment contracts.
“To lure victim-investors, Allensworth and Weddle promised them that their money would go into a brokerage account, and they would soon realize profits because Weddle employed a special trading strategy that would limit their losses and generate investment monthly returns of between 5%-20%,” read Thursday’s statement. “Instead of investing the money as promised, Allensworth and Weddle used part of the funds to pay for their personal expenses, including – for Allensworth – credit card bills.”
According to investigators, the two had also created a Ponzi-style scheme, in which they used victim-investor funds to pay off the withdrawals from other investors, claiming the funds were generated through investment gains. Neither Weddle nor Allensworth informed their clients, according to federal prosecutors, that they were not registered or licensed to be a commodity trading advisor.
“Weddle also fabricated multiple false account statements which they sent to victim-investors that purported to show the investments were steadily increasing in value based on Weddle’s trading activity, when Allensworth and Weddle had misappropriated the funds,” the sentencing statement said. “As a result of the fraudulent scheme, Allensworth and Weddle caused more than 50 victims to suffer total losses of approximately $2,320,000.”