Mich. money manager sued by the SEC is indicted on fraud charges tied to alleged Ponzi scheme

Mich. money manager charged with fraud

DETROIT — A Detroit-area man ran a decade-long Ponzi scheme, raising more than $200 million from investors fooled into believing their money was being used to finance telecommunications deals, according to an indictment unsealed Friday.

Edward P. May was indicted on 59 counts of mail fraud nearly two years after the Securities and Exchange Commission filed a lawsuit to shut down his financial-management company in Lake Orion.

May, 73, was released on bond after a judge entered a not-guilty plea on his behalf. He waved off a reporter as he left federal court.

“We’ve got a court process and we look forward to participating in it,” his lawyer, Harold Gurewitz, said.

Beginning in 1997, May promised regular monthly income to people, telling them he would plow their investments into lucrative telecommunications contracts with major hotels, according to the indictment.

But there were no contracts and the money instead was recycled to other investors or used by May to travel, gamble, pay off loans and make his own investments, the indictment says.

Authorities said the scheme ended in 2007 with losses exceeding $35 million. At the peak, as many as 4,000 checks were being mailed to investors each month.

The “charges allege a financial fraud and abuse of trust on a massive scale,” U.S. Attorney Terrence Berg said.

In November 2007, the SEC filed a lawsuit against May and his company and obtained a permanent injunction.

“The only fight we have right now is the amount of money Mr. May needs to pay on ill-gotten gains and a civil penalty,” said Peter Chan, the SEC’s assistant regional director in Chicago.

The next court hearing is Oct. 15.

The SEC this week also filed a lawsuit seeking more than $3 million from Michigan investment adviser Frank Bluestein, who is accused of helping May by soliciting $74 million from 800 people. His lawyer says he didn’t know May was running an illegal scheme.

Separately, lawyer David Findling of Royal Oak has been assigned to sue investors for their profits, even if they didn’t know May was not running a legitimate operation. The goal is to throw any gains in a pot for distribution to people who lost money.

About $500,000 has been collected so far, he said.

“There will be a significant number of lawsuits in the coming weeks,” Findling said.