SEC: Albany firm invested in "sexually-themed charter cruise venture"

yolo napkinFrom the SEC complaint against Albany investment firm McGinn, Smith & Co., which alleges the firm raised more than $136 million for fraudulent investments (emphasis added):

The Defendants also used offering proceeds to make unauthorized investments in and unsecured loans to speculative, financially troubled McGinn Smith Entities, to make MS & Co.'s payroll, to pay commission and transaction fees to McGinn Smith Entities, to make interest payments to investors in other entities, to support McGinn's and Smith's lifestyle, and to procure strippers for a "sexually themed" cruise.

Oh, wait. There's more:

78. McGinn, MS Capital and MS & Co. also deceived investors into unwittingly investing in a sexually-oriented charter cruise venture created by McGinn. In February 2008, MS & Co. launched a $3,250,000 note offering for an entity 50% owned by an MS & Co. affiliate called CCV. The PPM stated that CCV "is engaged in the business of procuring whole ship charters and selling the berths to various affinity groups." The PPM stated that the net proceeds of the offering would be used to charter a ship and to "underwrite the marketing, sales and administrative expenses associated with selling [the] berths for the cruise."
79. The PPM did not disclose that CCV operated under the name YOLO (You Only Live Once) Cruises, that the affinity group was sexually oriented, that strippers and go-go dancers would be procured to entertain passengers, that investor money would be used to buy insurance for these individuals and that YOLO was run by a woman with whom McGinn was romantically involved.

YOLO would appear to be this cruise company. No, that link is probably not safe for work.

80. The PPM failed to disclose that instead of marketing charters to an unlimited variety of "affinity groups" as represented, the charters would only be marketed to a narrow niche of potential customers interested in cruises "involving sexually themed activities among and between consenting adults" (as belatedly disclosed in a PPM for a later offering) and that the charters would involve legally and morally questionable activities that investors might not want to be associated with.
81. McGinn was the managing member of CCV. He was involved in its day-to-day operations and was keenly interested in the activities aboard the cruise. McGinn "borrowed" from other Trusts and Funds to fund CCV.

The SEC complaint alleges that CCV lost $1.5 million during its first 17 months of operation. But the company "transferred at least $50,000 to Smith, $75,000 to McGinn, and paid at least $245,000 to MS & Co. in 'advisory fees.'"

[via Brian and DealBreaker]

Comments

http://albany.bizjournals.com/albany/stories/2009/11/02/daily19.html

Timothy McGinn, chairman of McGinn Smith & Co. Inc., testified to details of the firm's employment of Bruno from 1993-2005 as a part-time financial consultant. Court papers show the company paid Bruno $630,000 over that time, increasing his pay after he became the most powerful person in the Senate.

Today must be "Albany Corruption Day" on AOA.

I've known Mr. McGinn for almost 2 years, and what is being alleged doesn't match the person that we know. With me he has always been honest and a very nice person. I wish him the best and hope he can get through this.

If, and again, if, he has done those things alleged, he will answer to the law and to God for it. I know for a fact that at least one of the implications of one allegation is false, so I wonder how many other are false as well.

I could allege my wife is a cocaine dealer but it doesn't make her one.


The problem from the start is inaccurate reporting of the facts. The media has in fact have confused deals and will print anything.

HOW DARE YOU ...people who do not know any better believe your B.S.

Very well said Val. I also think that the SEC was fed a bunch of B.S. and out of context stuff, and because they want to deflect their own issues, such as their employees watching PORN while on duty with our tax money. The supposed fleecing that took place by McGinn Smith, is nothing compare to the fleecing congress is doing on a daily basis to us, yet I don't see the mainstream press covering.

I'm just sick and tired of the crap that goes on daily.

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