An SEC investigation into a multi-million dollar Ponzi scheme may have been compromised by an employee based in Washington, D.C., according to SEC Inspector General H. David Kotz.  The investigation was disclosed in Kotz's semi-annual report to Congress, issued today. 

According to a report, the employee made claims to investors - of which he was one - that the company was legitimate.  While the report does not name the employee or the company involved, the dates coincide with the SEC's investigation of Imperia Invest IBC, charged last year with running a $7 million scam targeting deaf investors. 

Kotz's report says the employee repeatedly told investors that the company was legitimate "and that these investors would be receiving considerable sums of money for their investments."  Kotz found that around the time the SEC filed its case, the employee began sharing "nonpublic, false and misleading information" with his fellow investors.  "As a result," Kotz wrote, "his conduct not only confused certain investors and gave them a false sense of hope, but it also had the potential to adversely affect an ongoing enforcement investigation."

The SEC won a temporary asset freeze against Imperia in October, 2010, and won a default judgment on 2/14/11 on charges the company defrauded some 14,000 investors in a scam involving the sale of life insurance settlements.

Kotz has recommended the employee face disciplinary action, including possible dismissal.  The report also recommends that fellow employees in the office, which is not identified, receive training on the proper handling of nonpublic information.   [CNBC.com, 5/31/11]

For further details, go to:   [Management Report to Accompany the Semiannual Report of the Inspector General for period 10/1/10 - 3/31/11]