Financial Crime Weekly: SEC Charges 3 Texans With Running $91 Million Ponzi Scheme & Raytheon, RTX Agree To Pay $8.4 Million To Settle Allegations

SEC Charges 3 Texans With Running $91 Million Ponzi Scheme

The Securities and Exchange Commission on Tuesday charged Texas residents Kenneth W. Alexander II, Robert D. Welsh and Caedrynn E. Conner with running a Ponzi scheme that raised at least $91 million from over 200 investors.

According to the SEC, from May 2021 to February 2024, Alexander and Welsh operated the scheme through Vanguard Holdings Group Irrevocable Trust, which they claimed was a lucrative international bond trading business. 

Investors were promised 12 monthly payments of 3% to 6%, with their principal returned after 14 months. In reality, VHG had no meaningful revenue, and the returns paid to investors came from new investor funds, not trading profits.

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Conner, through his own entity Benchmark Capital Holdings Irrevocable Trust, funneled more than $46 million into VHG via a similar program. The three also offered a supposed “pay order” financial instrument to protect investments, but the SEC alleges this protection was fictitious.

The SEC’s complaint further states that Alexander and Conner misappropriated millions for personal use, including Conner’s purchase of a $5 million home. The SEC is seeking permanent injunctions, repayment of ill-gotten gains with interest and civil penalties against all three defendants. 

“As we allege, the defendants conducted a large-scale Ponzi scheme that caused devastating losses to investor victims, while Alexander and Conner misappropriated millions of dollars of investor funds,” said Sam Waldon, Acting Director of the SEC’s Division of Enforcement. “We remain unwavering in our commitment to hold individuals accountable for defrauding investors.”

Raytheon, RTX Agree To Pay $8.4 Million To Settle Allegations

Raytheon Co., its parent RTX Corp. RTX and Nightwing Group have agreed to pay $8.4 million to settle allegations that Raytheon violated the False Claims Act by not meeting cybersecurity requirements in contracts and subcontracts with the Department of Defense. 

Raytheon sold its Cybersecurity, Intelligence and Services business to Nightwing in March 2024. The settlement addresses alleged conduct from 2015 to 2021, before Nightwing acquired the business.

The U.S. Department of Justice alleged that Raytheon and its former subsidiary, Raytheon Cyber Solutions, Inc., failed to implement required cybersecurity controls and did not develop or maintain a system security plan for an internal development system used for unclassified work on 29 DoD contracts. 

The actions allegedly violated the Defense Federal Acquisition Regulation Supplement and Federal Acquisition Regulation rules which require contractors to safeguard federal contracts and covered defense information. The case was resolved under the False Claims Act, with a portion of the settlement awarded to the whistleblower who brought the case to the government’s attention.

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