As alleged Ponzi schemes go, $2 million is chump change nowadays. But the story behind Wednesday's announced indictment of former Georgia businessman Steven Canady points out how investors can't rely on securities regulators to protect them. The trail of complaints about his investment businesses goes back a decade.
In the latest case, New York prosecutors allege that Canady paid for his lavish lifestyle by stealing from clients. One client was a Georgia company, Global Capital Advisors. Canady, in his role as owner of Alliance Warburg Capital Management, allegedly promised Global that if it would invest $150,000 in one of his ventures, it would get a fat return in 30 days-- even if his venture failed. Prosecutors say Canady used that money to pay a previous victim.
Carroll County, Georgia, is apparently the only other place where prosecutors sought criminal charges against Canady. In 2013, he was indicted there for three counts of theft by taking, according to court records. The counts involved money he took from a Carrollton church and from two men. Canady pleaded guilty to all three counts under the first offender act and got 10 years probation, court officials said. He was also ordered to pay $630,000 restitution.
Back in 2005, when Canady was based in Atlanta and operated various businesses here, Missouri made similar allegations against a Canady company. Securities authorities there said that Canady Holdings promised some Missouri residents they would receive a 1000% return on their money in 30 days. That state called it a Ponzi scheme and wound up in 2006 barring the company and its agents from further violations. It also levied a civil fine.
The following year, the banking commissioner in Connecticut investigated the activities of Canady and another of his companies, Bayou Technologies, to see if they were violating securities laws there. The result: another cease and desist order, issued in 2008.
News reports also say that Georgia regulators tagged Canady as far back as 2004 for selling unregistered securities here.
Canady now faces nine criminal counts in the New York case: four counts of grand larceny in the second degree; four counts of criminal possession of stolen property in the second degree; and one count of scheme to defraud in the first degree.
Canady, who is 42, says on blogs and other online postings that he received a bachelor's degree from Emory in 1997, followed by a master's in 1999. Then in 2004, he claims he graduated from the Grace University School of Medicine at Cambridge University with a combination Doctor of Medicine and Doctor of Philosophy degree in Neuroscience. The last degree is a bit of a mystery. The General Medical Council in the U.K., which sets standards for medical students and doctors, said in 2005 that it was unclear who was awarding degrees from Grace University School of Medicine. GMC says it will not accept those qualifications.