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[SOS] Secretary of State investigation leads to arrest in alleged Ponzi scheme
Start Date: 7/3/2014 All Day
End Date: 7/3/2014
Entry Description

Man and daughter accused of selling unregistered securities to elderly investors

INDIANAPOLIS (July 3, 2014) — An investigation by Indiana Secretary of State Connie Lawson’s Prosecution Assistance Unit led to the arrest of Charles Blackwelder of Indianapolis and Cara Grumme of Yorktown, IN. Both were arrested today for allegedly running a Ponzi scheme by selling investment opportunities through rental properties to elderly investors. 

 

“Unfortunately, Ponzi schemes targeting the elderly are seen far too frequently by my office,” said Secretary of State Connie Lawson.  “This is another example of how important it is to check with my office to ensure the investment and the investment advisor are both registered prior to investing.  I am grateful for the hard work of my investigators to make sure Blackwelder and Grumme are brought to justice.”

 

The Secretary of State’s investigators found that for over a decade, Blackwelder’s company, CFS LLC, solicited over 300 elderly Hoosiers to invest in “real estate investment opportunities” that included undivided ownership interests to investors in rental properties owned by CFS. 

 

The investment was marketed as a means to legally shield the investor’s assets from consideration in determining their eligibility for Medicaid.  Beginning in 2012, several attorneys for investors began questioning CFS after their clients received foreclosure notices on their purchased properties.  Neither Blackwelder nor Grumme informed investors that their properties had been sold prior to their purchase or that foreclosures had already been filed on several properties.  Additionally, Blackwelder and Grumme were using several of the properties for their own personal use. 

 

Blackwelder and Grumme were each arrested on 20 different felony counts including securities fraud and other violations of Indiana Securities laws.  Proof of claims currently filed with the courts total approximately $23 million. 

 

“I commend the work of investigators Tanya Growe and Kim Haskett and attorneys Mat Allen and Diana Moers from my office on their diligent work which led to these arrests.  Their service is working to make Indiana a safer place for investors,” Secretary Lawson said. 

 

“Securities fraud comes with serious penalties because of the devastation and destruction it renders.  This is particularly the case when allegations are directed at a member of the legal profession who convinced clients to put money into an unlawful investment as a way to protect assets at the end point of their lives,” said Securities Commissioner Carol Mihalik.

 

This is still an ongoing investigation. The counts described are allegations. Blackwelder and Grumme are presumed innocent until proven guilty.

Contact Information:
Name: Valerie Kroeger
Phone: 317-233-8655
Email: vkroeger@sos.in.gov
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