LOS ANGELES (CNS) - The former CEO of a Valencia-based financial services company was sentenced today to 33 months in federal prison for his role a Ponzi scheme that bilked dozens of investors -- including his own clients -- out of more than $2.3 million.
Scott Allensworth, 68, of Santa Clarita, was also ordered by U.S. District Judge John A. Kronstadt to pay more than $2.3 million in restitution, according to the U.S. Attorney's Office.
Allensworth pleaded guilty to one count of wire fraud in July 2021. He was the owner and CEO of Capital Growth Group Associates, a company that provided financial services such as tax advice and return preparation services, accounting services, retirement planning and investment advisory services.
Prosecutors said that from November 2015 to March 2017, Allensworth took part in a fraud scheme with David Hunt Weddle, 66, who managed a private investment fund through JustInfo LLC, a company Weddle controlled and operated out of his Kentucky home.
Allensworth and Weddle solicited money -- to be invested with CGGA and Weddle -- from unsuspecting investors, included some of Allensworth's clients. Some of those clients, unaware they were being defrauded, recommended Allensworth to their friends and relatives, who also became victims.
Allensworth and Weddle promised would-be investors that their money would go into a brokerage account and see monthly returns of 5% to 20%. But instead of investing the money, Allensworth and Weddle used the money to pay for their personal expenses, including -- for Allensworth -- credit card bills, prosecutors said. In Ponzi style, they also used victims' money to repay other victims, falsely claiming the money was the result of investment gains.
In total, Allensworth and Weddle bilked more than 50 victims out of more than $2.3 million, prosecutors said.
Weddle pleaded guilty in March 2021 to one count of wire fraud and is serving a 41-month prison sentence.
The SEC brought civil charges against Allensworth, Weddle and JustInfo LLC in October 2017. The case settled the following year with the defendants agreeing to pay more than $300,000 in civil penalties.