The Securities and Exchange Commission filed a complaint against Cheryl
L. Jones, a Washington D.C. based realtor and sister to convicted Ponzi
schemer Mark Jones. The SEC alleges that Cheryl Jones recruited a number
of her colleagues and friends to invest with her into her brother’s
bridge loan scheme, personally walking away with more than $1.3 million,
while other investors lost millions.
The complaint, filed in federal court in Boston, details how Cheryl Jones
put in $875,606 into her brother’s bridge loan operation between
2007 – 2015, and walked away with 100 percent of her investment
“as well as additional payments totaling $514,912 that she received
from her brother,” the court documents read.
The SEC claims that through her acts, Cheryl Jones engaged in the offer
or sale of unregistered securities.
Mark Jones was sentenced to 70 months in prison in March for the Ponzi
scheme. He was also ordered to pay $3.9 million in penalties. Court documents
describe how Mr. Jones convinced some 25 investors to pay money directly
to him, told those investors he was using the money as bridge loans for
Jamaican businesses and promised 15 to 20 percent annual return on their
The SEC says that instead of using the funds for loans as promised, Jones
was actually depositing the money into his individual bank accounts and
using the cash for his personal use.
“He explained to investors that routing their funds through his account
would reduce paper work and shield them from undue economic risks,”
the complaint states. “In return, he provided investors with his
promissory notes and personal guarantees.”
Through falsified documents, Mark Jones was able to convince investors
that he had regular communication with the borrowers when he traveled
to Jamaica. He reported that the bridge loans were secured by collateral,
when in reality, according to the SEC, “there were virtually no
Cheryl Jones was one of the first investors in her brother’s scheme
and soon began to recruit individuals she believed had money to invest,
even traveling to Jamaica with one investor to meet with her brother,
the SEC alleges. Miss Jones recruited investors, eased concerns and answered
questions regarding their money, and guided her brother on how to keep
the investors calm when they began inquiring about financials statements.
“On February 4, 2013, when Mark Jones failed to send periodic account
statements to his investors, she emailed him suggesting that he ‘reinstitute
that practice to keep people calm,’” court documents describe.
Miss Jones also purportedly received a monthly “legal retainer,”
which at one point was as high as $7,000, by her brother for services
rendered to him for the bridge fund. The SEC says Cheryl Jones was well
aware that the cash she received “far exceeded” the value
of any actual legal services she offered to her brother.
The SEC's complaint charges Cheryl Jones with violating Section 5 of
the Securities Act of 1933. The SEC seeks a permanent injunction against
Cheryl Jones, payment of civil penalties, and disgorgement of any illegal
financial gains related to the bridge loan scheme.