Feds: Suicide helps regulators uncover NC man's Ponzi scheme that funded parties, a Maserati

Almost every single month for nearly six years, regulators say Bruce Kramer's investments lost money.

Court documents, however, reflect that the self-professed expert mathematician told his 79 customers that the $40 million he was trusted to manage was safe — and growing. He promised remarkable monthly returns of 3 to 4 percent and told one client that "he never lost a dollar of principal."

Kramer's operation became known after he committed suicide last month. A federal judge has ordered his assets frozen. In a civil lawsuit trying to reclaim the money, the U.S. Commodity Futures Trading Commission portrays Kramer as nothing like the market genius he claimed to be.

Investigators said he invested less than half the money he received from customers and lost most of it. He used about $20 million to pay clients in a Ponzi scheme and used the rest on his lavish lifestyle — buying a Maserati and holding extravagant parties, they said.

Stephen J. Obie, acting director of enforcement at the CFTC, said Kramer's case is just one in a surge of frauds that have been exposed this year. In the last fiscal year, his agency brought 13 enforcement actions.

Since January of this year, investigators have already filed 15 actions as the economy has forced scammers to a moment of reckoning and investors have began asking the tough questions.

"We have certainly seen a substantial uptick in the number of fraudulent Ponzi scheme type cases," Obie said. "It surprises me how many investment scammers are out there."

Obie said investors have become more wary since the exposure of the stunning scheme peddled by respected investor Bernard Madoff, who pleaded guilty to securities fraud, perjury and other charges last week and was immediately sent to prison to await a June sentencing, when he faces up to 150 years in prison.

Kramer's clients recently expressed concern about their investments, citing Madoff's case, according to court documents. Investigators contend that Kramer went to great lengths to reassure them — creating fake trading statements that showed that the trading accounts were profitable and held $59 million in assets.

However, court document say that by the end of February, the trading account's of Kramer's company Barki LLC held just 1 percent of what he claimed — about $600,000. Much of the investments had gone to Kramer's personal indulgences — a 48-acre horse farm in Midland, a 6,000-square-foot home, a Maserati, artwork and a race horse.

"Not only is (the lavish life) a benefit to the fraudster, but it's also a part of the fraud," Obie said. "It lures people in to believing that they're successful."

Investors in the case said they also felt comforted knowing that the 55-year-old was drawing investments from close family and friends, making the venture feel exclusive.

"That was the comfort level," said John Manzella, 42, of Charlotte. "These weren't strangers."

Manzella, who has filed a lawsuit in state court trying to reclaim some of the money, said Kramer always took the time to give detailed explanations of how he was investing, and Manzella said the system was reasonable. Even after the Madoff case broke, Manzella said Kramer was able to alleviate concerns by answering questions at length about his operation.

Each investor got monthly statements detailing how much their money had grown, with Manzella's initial investment of several hundred thousand dollars more than doubling in size.

Barbara Craig, 57, of Daphne, Ala., said she and her husband invested with Kramer about five years ago. Using their home as collateral and draining their savings, they invested about $1 million to the friends they trusted.

Craig said she didn't learn of the alleged scam until she called a few days after Kramer's death, asking for a withdrawal of money to help pay for heart surgery. Instead, she learned that there wasn't any money to have.

The Craigs are now trying to quickly sell their house.

"Now we have nothing. We have nothing," said an emotional Craig in a phone interview. "I almost had a nervous breakdown. I had to go to the hospital. And I'm not over it yet."

In court documents, federal investigators also name Kramer's wife, Rhonda, but say she is not charged with violations. The suit demands that she return and repay assets, saying she isn't entitled to them.

Craig, however, believes that Rhonda Kramer played a crucial role in the scheme.

"Bruce did not come after us to invest," Craig said. "It was Rhonda who was coming after us to ask us to invest."

Rhonda Kramer's attorney did not return a call seeking comment.