A Classic Ponzi Scheme
Regulators block investment club
Indiana State officials this week ordered indicted home decorator Elaine Netolicky to stop selling unregistered securities as the architect of a money-making scheme dubbed The Investment Group, or TIG. Elaine Netolicky is the wife of former Indiana Pacers star Bob Netolicky. Imagine how Bob’s feeling now. Hope she signed a prenup. “It really is a classic Ponzi scheme,” said Secretary of State Todd Rokita , referring to the time-honored ruse involving scam artists who use one client’s investment to pay another client’s earnings, and pocket a profit in the process. “We think there are more victims out there that we may not know about.” The stop order and complaint filed Wednesday by the Securities Division of Rokita’s office is the latest development in civil and criminal investigations that link Netolicky to clients who funneled hundreds of thousands of dollars into her private investment club. So far, the 53-year-old entrepreneur has avoided criminal charges as the club leader who lured well-heeled investors with promises of “fast cash” and hefty returns on real estate ventures.
The TIG investment scheme was described in detail in the complaint signed by Securities Division enforcement attorney Paul K. Lawson. “Over a duration of time beginning in 2002 until at least March 2006, Netolicky offered and/or sold ‘investments’ in TIG to at least one Illinois resident and 13 Indiana residents from Hamilton, Marion, Johnson and LaPorte counties,” Lawson said. “It was represented that (the) only way to join the group was when someone left the group or died and an opening was created. The investors were told by Netolicky that TIG worked with, was affiliated with, or controlled by the ‘Duke Family’ of Duke University. The investment, when it was explained by Netolicky, was represented to be in real estate, with the predominant story being that TIG was purchasing property damaged by hurricane Katrina, fixing up the property and then reselling it for a profit.” Wow, lie after lie after lie. According to the complaint, Netolicky obtained money from members that was to be held in an individual investment account pending future transactions, which could include “Fast Cash” opportunities involving short term loans with a specified return or rate of interest.
One member, Hamilton County resident Joseph Diederich, sued Netolicky in March to regain money he lost after investing $231,000 in the club. Diederich’s attorney, Philip D. Sever, also characterized the club as a Ponzi or pyramid scheme that eventually takes a toll when the pool of investors’ money dries up and the pyramid collapses. Most of the victims were individuals who met Netolicky through her home furnishings business and were then drawn in by her sales pitch to join the investment group. Members of The Investment Group who suspect they have been bilked can contact the Securities Division of the Office of Secretary of State Todd Rokita at (800) 223-8791.
