SEC charges Edward May with fraud

Edward May, the flamboyant Detroit area money manager, was charged this morning by the SEC for a committing a massive $250 million fraud that turned as many as 1,200 investors into victims.
The deals offered by Mr. May and his firm, E-M Management Co. LLC, involved shares in bogus Las Vegas casino and resort telecommunications transactions, the SEC said.
The FBI is also investigating the money manager and his firm concerning the series of investments that recently collapsed (InvestmentNews, Oct. 22) .
According to the SEC, Mr. May sold investors shares of limited liability companies that claimed to receive revenue from telecommunications equipment and services contracts with hotels, casinos, resorts and similar establishments, many of which were purportedly located in Las Vegas.
No such contracts ever existed, said the SEC, which filed its civil complaint in U.S. district court in the Eastern District of Michigan.
Mr. May and E-M management raised as much as $250 million between 1998 and July 2007 from investors living in such states as Michigan, California, Florida, Illinois, New York, Ohio and New Jersey.
Mr. May and E-M Management told investors that the LLCs had been contracted to install and provide telecommunications equipment and services to such major hotel chains and casinos as Hilton, MGM Grand, Motel 6, Tropicana and Sheraton, according to the SEC.
Both orally and in writing, May and E-M promised returns in the form of monthly payments to investors for a period as long as 12 to 14 years, and “guaranteed” that investors, at a minimum, would receive the promised payments for approximately the first 20 to 24 months after they invested.
Mr. May and his firm relied on a network of individuals, some of whom organized “investment seminars,” to entice investors to invest with E-M, contends the SEC.
Mr. May’s attorney, Harold Gurewitz, was not immediately available for comment.