Copley Man Accused in Ponzi Scheme; $17 Million Allegedly Stolen

“If something seems too good to be true, it usually is.”

These words to live by came from the mouth of U.S. Attorney Steven Dettelbach, quoted in a Northeast Ohio Media Group article about a Copley Township man accused in a Ponzi scheme that allegedly stole $17 million from 70 investors over a four-year period.

Federal fraud charges have been leveled against Kenneth A. Grant, 66, according to court records reported by NEOMG on Monday. The specific charges are conspiracy to commit wire and securities fraud and money laundering.

The NEOMG reported that Grant co-owned and operated KGTA Petroleum, Ltd., a company that supposedly earned money in the petroleum business, both buying and selling crude oil and refined petrol products.

According to information in the federal charging document, Grant and his partner(s) would claim that he has connections with third-party buyers and investors that allowed him to obtain petroleum products at steep discounts, which he could then resell for big profits. For example, the NEOMG report said KGTA would issue agreements that promised very lucrative returns, as much as 5 percent per month or 60 percent annually.

At the same time, however, documentation about KGTA was never filed with the federal Securities and Exchange Commission (SEC), according to the federal documents.

And as it turned out, the promises were “too good to be true” by a long-shot, according to the charges. The NEOMG story said federal authorities allege that Grant and others took $31 million from 70 investors from 2010 to 2014, knowing that none of the promises were true, or that, indeed, the company had arrangements in place to buy and sell petroleum products.

The NEOMG story reported that Grant and others allegedly spent their investors’ money on luxury items such as a yacht, a Mercedes Benz car and mortgage payments on expensive residential property.

The case was investigated by the FBI and the Internal Revenue Service’s Criminal Investigations Division, the report said.

In a lawsuit filed last May against Grant, his partner Thomas Abdallah (aka Tom Abraham) of Brunswick, Ohio, their company KGTA Petroleum, and other defendants, the SEC alleged that Grant and Abdallah helped convince prospective investors to buy KGTA promissory notes, assuring them the investments funds and returns would flow through a carefully monitored escrow account.

However, according to the SEC lawsuit in U.S. District Court for the Northern Ohio District, “the KGTA oil business was a sham and the escrow safeguard a mirage. In reality, Grant and Abdallah operated KGTA as a Ponzi scheme and (their attorney) never followed the promised escrow procedures. The purchase orders did not exist; KGTA did not sell fuel or oil to its ‘major buyers,’ and KGTA did not generate revenue through the purchase and resale of oil products.”

Rather, according to the SEC filing, investor cash was distributed directly to KGTA, which then used some of the funds (apparently the difference between $31 million taken from investors and $17 stolen from investors) to pay fake “returns” to old investors. “Grant and Abdallah also took some of the investment proceeds for their own personal use – including car payments, country club dues and over $200,000 in cash withdrawals,” The SEC alleged.

In the lawsuit, the SEC requested a jury trial.