Secretary of State William F. Galvin on Tuesday charged John W. Cranney of Belmont with running a Ponzi scheme that defrauded at least 36 victims nationally of $10.4 million, by promising high returns on safe investments for retirement.
The state’s Securities Division alleged in an administrative complaint that Cranney took client funds for his own use.
Cranney has been a longtime representative for Shaklee Corp., a California company that recruits salespeople to sell health and personal care products. According to the complaint, Cranney used investors’ money to fund his Shaklee business. He also used money from one set of investors to repay other investors, the complaint alleged.
Most of Cranney’s victims are affiliated with Shaklee, and “many are senior citizens,’’ Galvin said. In Massachusetts, alleged victims invested more than $1.5 million with Cranney.
Cranney’s lawyer in Hartford, Thomas Finn, said, “We’re aware that the division is conducting an investigation, and Mr. Cranney has fully cooperated.”
Finn said he was alerted that a complaint was being filed, “and we will address the issues in the complaint in due course.”
Galvin’s office alleged that Cranney offered and sold unregistered securities in the form of promissory notes. Cranney allegedly used his longtime affiliations with family, friends, and colleagues at Shaklee to gain their trust and solicit investments.
According to Galvin’s office, Cranney was “sponsored into Shaklee” in 1967 and is sponsor for about 50,000 distributorship contracts.
Shaklee, in a statement said the company was aware of the complaint against the man they know as Jack Cranney. “According to the complaint, the legal action relates to activities that are unrelated to Shaklee’s business. We are strongly against and do not condone the actions of which Mr. Cranney is accused.”
The company said it has suspended all of Cranney’s rights and privileges as a distributor. “Shaklee will be monitoring this situation closely and will take further action pending the outcome of additional investigation and/or these proceedings,’’ the statement also said.