The Ponzi schemer who helped bring about the demise of independent broker-dealer GunnAllen Financial Inc. was sentenced in Michigan last week to 16 years in federal prison.
Edward P. May, 75, in April pleaded guilty to 59 counts of mail fraud. Federal prosecutors had charged him with creating a decade-long investment fraud that raised more than $350 million from investors in a scheme that touted bogus shares in companies offering telecommunications services in hotels.
In total, investors lost $49 million in the Ponzi scheme, according to prosecutors.
The scam collapsed in the summer of 2007.
Mr. May formed E-M Management Co. LLC in 1997 and eventually solicited 1,200 investors to invest in 250 limited-liability companies, while guaranteeing monthly income of $30,000 to $100,000 from each limited liability corporation, according to a statement by the U.S. attorney's office for the Eastern District of Michigan
He stole the funds invested in the LLCs for his personal use.
Mr. May worked closely with former GunnAllen Financial stockbroker Frank Bluestein.
Mr. Bluestein's sale of Mr. May's private placements and the onslaught of lawsuits that followed was widely acknowledged as a key reason for the demise in March 2010 of GunnAllen Financial, one of the fastest-growing broker-dealers of the past decade.
Mr. Bluestein has said that he had no knowledge of the Ponzi scheme and he bought the investments himself.
That matter is still pending.
Mr. May's sentence was “not surprising, given amounts of money involved,” said David Foster, Mr. Bluestein's attorney in the SEC matter.
Mr. Forster declined to comment about Mr. Bluestein.
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