May 06, 2008

ORANGE COUNTY MAN ARRESTED IN $25 MILLION PONZI THAT TARGETED CHRISTIAN INVESTORS

SANTA ANA, Calif. – A Mission Viejo man was arrested this morning on a federal wire fraud charge that alleges he orchestrated a Ponzi scheme that solicited more than $25 million from victims around the nation and that he used $1 million of victim funds to invest in a golf course.

Jon G. Ervin, 61, who operated Safevest LLC in Mission Viejo and, more recently, in Laguna Hills, was arrested without incident this morning by special agents with the Federal Bureau of Investigation.

In related actions, the Securities and Exchange Commission, as well as the Commodity Futures Trading Commission, filed lawsuits yesterday afternoon and quickly obtained orders freezing the assets of Ervin and Safevest.

A criminal complaint filed yesterday in United States District Court alleges that Ervin used Safevest to solicit victims to invest in a bogus commodity futures trading program. Many of the victims were recruited by a Virginia pastor, the complaint affidavit alleges.

Investors were told that Safevest had a historical average return of 0.5 to 1 percent every day, according to the complaint. Ervin maintained a Safevest website, where investors could log on and check daily “returns” – a setup similar to an earlier scheme involving Ervin that prompted a lawsuit by the SEC in 2003

Safevest solicited approximately $25.7 million from approximately 550 investors, the complaint alleges. None of the money was ever used to trade commodities, according to an analysis by the CFTC. An accountant with the SEC has determined that approximately $18.5 million had been returned to investors. Safevest bank records also showed that more than $41,000 went to an Orange County car dealership to purchase a sport utility vehicle for Ervin. Safevest funds were also used to make purchases from airlines, retail outlets and restaurants.

Ervin is expected to make his initial court appearance this afternoon.

A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The wire fraud count alleged in the complaint carries a statutory maximum penalty of 20 years in federal prison.

The criminal case against Ervin was investigated by the Federal Bureau of Investigation, which received substantial assistance from the Securities and Exchange Commission and the Commodity Futures Trading Commission.

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For more information on federal criminal defense law, contact the Law Offices of Joseph Shemaria of Los Angeles, California.