Scott Allensworth, 68, of Santa Clarita, was sentenced to 33 months in federal prison for a Ponzi scheme that defrauded investors, including his own clients, out of $2.3 million.
Allensworth is the former owner and chief executive of Capital Growth Group Associates, which provided tax advice, accounting services, retirement planning, tax return preparation and investment advisory services to clients.
From November 2015 to March 2017, Allensworth defrauded investors with David Hunt Weddle, 66, who managed a private investment fund through JustInfo LLC, a company that was controlled and operated out of his home in Somerset, Kentucky.
Allensworth and Weddle solicited money from investors who included Allensworth’s clients. The money was to be invested with Capital Growth Group Associates and Weddle. Clients trusted Allensworth based on their prior relationship with him and recommended Allensworth to friends and family, who also fell victim to the scheme.
Investors were defrauded through false promises of earning up to 20% monthly returns on their money.
Allensworth and Weddle used part of the funds to pay for personal expenses such as credit card bills. They also used investor funds to repay and fund withdrawals requested by other victim-investors, falsely representing that the money comprising the withdrawals was from investment gains.
Allensworth and Weddle failed to inform victim-investors that they were not registered or licensed as commodity trading advisors and that the U.S. Securities and Exchange Commission subpoenaed them in December 2016.
In total, approximately $2.3 million in losses were suffered by more than 50 victims.
Weddle pleaded guilty in March 2021 to one count of wire fraud and is serving a 41-month prison sentence for the crime.