SEC suing dead man's estate over alleged options scam

0 Comments | Deseret News (Salt Lake City), Aug 27, 2007 | by Bloomberg News

The U.S. Securities and Exchange Commission has sued the estate of a Florida con artist who died last month, shortly after he allegedly reaped $1 million with a stock-options scam.

A U.S. District Court judge in Miami last week granted the SEC's request to freeze assets that belonged to Frederick Kunen, a 55- year-old man who resided in Coconut Creek, the agency said on its Web site Friday. Kunen, who was imprisoned for a Ponzi scheme in 2001 and again in 2004 on bank-fraud charges, died in St. Maarten in the Caribbean on July 11, the SEC said.

Last January, Kunen began soliciting investors for an options trading program that guaranteed 10 percent to 20 percent risk-free monthly returns, according to the SEC's lawsuit. The plan raised $2.5 million, while Kunen pocketed $1 million, the SEC said. None of his clients' accounts showed profits, it said.

"Kunen touted himself as a successful trader" who previously owned a brokerage firm, the SEC said in its lawsuit. He didn't mention "he was a convicted felon and failed to tell investors he was incarcerated for some of the time he claimed he was successfully running the options-trading program."

Charles Morgan, who is overseeing Kunen's estate, said he and the SEC are on "the same track" in their effort to return funds to alleged victims. The case was referred to his office, and he doesn't know the circumstances of Kunen's death, he said.