Feds probe deceased Jax fund manager
The Securities and Exchange Commission announced Friday that it obtained an asset freeze and other emergency relief against the estate of a Jacksonville fund manager who authorities say stole $34 million from investors.
The SEC alleges Kenneth Wayne McLeod defrauded active and retired government employees and law enforcement agents with a Ponzi scheme to bilk investors of at least $34 million since 1988 through his benefits consulting firm, Federal Employee Benefits Group, Inc. (FEBG), and his registered investment adviser, F&S Asset Management Group, Inc.
McLeod was found dead of an apparently self-inflicted gunshot wound June 22 in a Mandarin park, according to published reports.
Instead of purchasing bonds for an estimated 260 investors, McLeod is accused by the SEC of using the retirement savings to pay himself and to splurge on lavish entertainment, including annual trips to the Super Bowl for himself and 40 friends. The SEC alleges that McLeod offered investors guaranteed returns of 8 to 10 percent through a purported tax-free “FEBG Bond Fund” or “FEBG Special Fund.”
He told investors that their principal would be 100 percent invested and secured by government bonds, the commission alleges. McLeod told investors that the fund invested in government securities provided a 13 percent return and falsely claimed that the 3 percent to 5 percent would be used to expand FEBG and other businesses.
The SEC alleges he told investors that the principal would be locked up for various periods of up to 8 years due. He also issued some investors false FEBG Bond Fund account statements, which showed fake interest earnings and gave investors options to reinvest their quarterly earnings instead of receiving distributions, which many investor did.
The expectation of return spurred some investors to retire from law enforcement or public service. Some investors rolled over their retirement and savings accounts into the bond fund or invested their inheritances and their children’s tuition savings.
A hearing is set for July 6 in Miami to determine whether the emergency asset freeze and other relief should stay in effect.