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SEC Charges Jeffrey Grayson and Capital Consultants With Fraud
Oregon philanthropist and his investment management firm, Capital Consultants, LLC, allegedly conducted a Ponzi Scheme involving $71 million to cover up a failed $160 million loan to a local entrepreneur.
The SEC called the case "one of the largest and costliest frauds ever perpetrated by an investment adviser". This is a fall from grace for Grayson, who once was a civic leader, and managed over $1 billion, mostly for union pension funds, companies and wealthy Oregonians. However, Grayson allegedly always skirted close to the edge in running his business. For example, he invested only about one-half of his clients' funds into publicly traded stocks and bonds. The rest was invested in "private" transactions, such as speculative loans, which generated big fees for Grayson and his firm.
Source: Wall Street Journal, November 13, 2000
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