U.S. halts two Ponzi schemes in wake of Madoff

By Rachelle Younglai

WASHINGTON (Reuters) - The U.S. government took action on Thursday to halt two Ponzi schemes as investors continue to reel from the fallout of accused swindler Bernard Madoff's alleged $50 billion (£33 billion) fraud.

Securities and futures regulators charged a Philadelphia-area fund manager with operating a $50 million Ponzi fraud, in which he paid off early investors with money from later investors, officials said.

In a separate case, authorities charged an 82-year-old man with allegedly running a $17 million Ponzi scheme where he targeted the elderly and members of the Catholic community, including priests, religious orders and cemetery funds.

The charges come about a month after Madoff was arrested for allegedly swindling billions from investors, banks and charities. The Securities and Exchange Commission has been criticized for failing to detect Madoff's alleged fraud.

On Thursday, the SEC and the Commodity Futures Trading Commission alleged that 53-year-old Joseph S. Forte reported consistent returns to his investors even though he consistently lost money, withdrew millions of dollars in fees for personal use, and used investor funds to repay other investors.

Forte claimed he was a successful commodity futures trader and that his fund had a successful track record, the CFTC said. He was never registered with the SEC, nor was his fund registered with the CFTC. The SEC said it has obtained an emergency court order freezing Forte's assets.

According to the government complaints, Forte conducted the Ponzi scheme since at least February 1995 and solicited about $50 million from as many as 80 investors, including at least one charity, to participate in a commodity futures pool.

The SEC complaint said that late last month, Forte admitted to federal authorities that he had been conducting the Ponzi scheme and that he did not have the funds to repay investors.