Kenneth Wayne McLeod
At seminars filled with government employees, he'd tell his rapt audience, some just starting their careers, some near the end, how to save for retirement, particularly the government's Thrift Savings Plan. Because McLeod was a guy's guy, cheerful and charismatic, and because he seemed like a cop in many ways, they trusted him. He wasn't some Ivy League drone who didn't understand what they went through every day, nor did he talk about numbers in a mystifying or boring way. He was someone with whom they connected.
If his audience had questions, McLeod would furnish them with materials and brochures from his own company, free of charge according to the SEC.
If after filling out the questionnaire, they were still interested in more information, for an extra $300 he would, the SEC wrote in its court documents, perform "a 'stage 2' analysis, a one-time investment analysis of all investments" in the employee's portfolio.
If investors went further down McLeod's rabbit hole, they would find themselves being offered the chance to take part in a super-exclusive bond fund, the FEBG Bond Fund, of which top members of the government were also part. To hear McLeod tell it, the fund practically printed money, and yes, money, incidentally, did grow on trees. During one of his two interviews with the SEC, McLeod admitted he told potential clients for this fund "anything they wanted to hear."
He later admitted that he'd made $35 million over the course of 22 years, bilking about 135 investors. But it might have been more. After a review of the files, the government found that there may have been 260 investors involved in the Ponzi scheme.
He would tell people that there was an 8 percent return on money annually, or 10 percent on a three-year bond, all of it tax free.
He told one potential victim, Kurt Coront, that the fund was a "Private Silent Partnership Bond Issue between you and FEBG. This account is only offered to my best clients, closest friends and family." In another letter, he claimed that the bond fund held money for "18 Federal judges, 4 members of Congress, and 13 high level agency heads."
If people were in the investment for the long haul, McLeod offered, they could get a whopping 13 percent return. The SEC reported that McLeod would tell investors that he would use some of that money—three to five percent—to build his business, but that "principal would remain untouched."
Making matters even more complicated—and which should have been a big, red flag to his victims—the money wouldn't be accessible for eight years, and quarterly interest payments could be rolled right into the fund to compound their supposed earnings. This his investors overwhelmingly did, but instead of building their own nest eggs, they lined McLeod's pockets instead.