SEC Charges Texas Trio in $91 Million Ponzi Scheme Targeting Over 200 Investors

Bold Fraud Allegations in Multi-Million Dollar Ponzi Scheme

The Securities and Exchange Commission (SEC) has charged three Texas residents—Kenneth W. Alexander II, Robert D. Welsh, and Caedrynn E. Conner—for orchestrating a sweeping Ponzi scheme that defrauded more than 200 investors out of at least $91 million. Operating under the guise of a legitimate investment opportunity, the trio allegedly misled victims with false promises of guaranteed high returns and fabricated protections against loss.

High-Yield Promises and Misleading Representations

According to the SEC complaint, filed on April 29, 2025, in the U.S. District Court for the Eastern District of Texas, Alexander and Welsh operated through a sham entity named Vanguard Holdings Group Irrevocable Trust (VHG). From May 2021 through February 2024, they lured investors by promising monthly returns ranging from 3% to 6%, with full return of the original principal after 14 months.

The defendants positioned VHG as a thriving international bond trading firm with supposed billions in assets. Investors were assured that the generous returns were derived from bond trading activities. In reality, the business was non-operational, generating no legitimate income. The promised returns were simply Ponzi payments—funds from new investors used to pay earlier ones.

Benchmark Capital and the Role of Caedrynn Conner

Caedrynn E. Conner, also named in the complaint, played a critical role in the fraud by funneling over $46 million into VHG through another entity—Benchmark Capital Holdings Irrevocable Trust. Conner controlled Benchmark and used it as a feeder fund to support VHG’s operations. Investors were misled to believe that Benchmark was a legitimate investment vehicle, when in fact, it was simply a conduit to perpetuate the Ponzi scheme.

The SEC alleges that Conner also promoted a so-called “pay order”—a financial instrument claimed to shield investors from losses. However, this safeguard was entirely fictitious. Investors who believed their funds were protected by this product were, in fact, exposed to the full risk of complete loss.

Misappropriation of Investor Funds for Personal Gain

In a particularly egregious aspect of the case, the SEC details how Alexander and Conner misappropriated millions of dollars for personal use. Among the lavish expenditures was Conner’s purchase of a $5 million home, directly funded by investor money. These expenditures highlight the fraudulent nature of the scheme and the blatant abuse of investor trust.

SEC Enforcement Action and Legal Consequences

The SEC’s action seeks to hold Alexander, Welsh, and Conner accountable under federal securities laws, charging them with violations of antifraud and registration provisions. Specifically, the SEC’s complaint demands:

• Permanent injunctive relief to prevent further violations

• Disgorgement of ill-gotten gains with prejudgment interest

• Imposition of civil monetary penalties against each defendant

Acting Director of the SEC’s Division of Enforcement, Sam Waldon, emphasized the seriousness of the offense, stating:

“As we allege, the defendants conducted a large-scale Ponzi scheme that caused devastating losses to investor victims, while Alexander and Conner misappropriated millions of dollars of investor funds. We remain unwavering in our commitment to hold individuals accountable for defrauding investors.”

Ponzi Scheme Red Flags for Investors

This case underscores key Ponzi scheme warning signs that investors should vigilantly watch for, including:

• Guaranteed high returns with little or no risk

• Complex financial instruments that cannot be independently verified

• Lack of legitimate revenue sources

• Use of newer investor funds to pay earlier investors

• Pressure to reinvest or avoid cashing out

The SEC’s charges against Alexander, Welsh, and Conner are the latest in a string of enforcement actions targeting financial frauds that exploit investor trust. The case serves as a critical reminder of the need for due diligence and skepticism when evaluating investment opportunities promising outsized returns.

SEC Press Release

Representing Advisors and Investors, Nationwide.