The former CEO of a Valencia-based financial services firm was sentenced to 33 months in federal prison on Thursday for his role in a Ponzi scheme that defrauded dozens of investors — including his own clients — out of more than $2.3 million.
Scott Allensworth, 68, of Santa Clarita, was also ordered by U.S. District Judge John A. Kronstadt to pay more than $2.3 million in restitution, according to the U.S. Attorney’s Office.
Allensworth pleaded guilty to one count of wire fraud in July 2021. He was the owner and CEO of Capital Growth Group Associates, a company that provided financial services such as tax advice and tax preparation services, accounting, retirement planning and investment advisory services.
Prosecutors said that from November 2015 to March 2017, Allensworth participated in a fraudulent scheme with 66-year-old David Hunt Weddle, who managed a private equity fund through JustInfo LLC, a company Weddle controlled and operated from his home in Kentucky.
Allensworth and Weddle solicited money – to invest with CGGA and Weddle – from unsuspecting investors, including some of Allensworth’s clients. Some of these clients, unaware that they were victims of fraud, recommended Allensworth to their friends and relatives, who also became victims.
Allensworth and Weddle promised potential investors that their money would go into a brokerage account and see monthly returns of 5% to 20%. But instead of investing the money, Allensworth and Weddle used the money to pay for personal expenses, including — for Allensworth — credit card bills, prosecutors said. Ponzi-style, they also used victims’ money to pay off other victims, falsely claiming the money was the result of investment gains.
In total, Allensworth and Weddle defrauded more than 50 victims out of more than $2.3 million, prosecutors said.
Weddle pleaded guilty in March 2021 to one count of wire fraud and is serving a 41-month prison sentence.
The SEC filed civil charges against Allensworth, Weddle and JustInfo LLC in October 2017. The case settled the following year, with the defendants agreeing to pay more than $300,000 in civil penalties.