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CPA Barred for Ponzi Role

A Philadelphia area CPA has been barred from SEC practice for his role in a Ponzi scheme that operated for 13 years. CPA John N. Irwin received $5 million in fees and trading profits as he and his firm, Jacklin Associates, steered clients to Joseph S. Forte  and their partnership, Joseph S. Forte LP, which fraudulently obtained $75 million from more than 100 investors that includes area at least one area church and a private school on whose board Jacklin sat.

Without admitting wrongdoing, the 73-year-old Irwin, based in Radnor, Pa., agreed to a cease-and-desist order regarding any further SEC violations and was ordered to disgorge fees, trading profits and prejudgment interest. No amount was given in the SEC documents.

Investors lost about $38 million after the scheme collapsed in December 2008. The fund was supposed to invest futures contracts on the Standard & Poor's 500-stock index. But the SEC alleged that Irwin, a limited partner in Forte LP, misled investors by relying on representations from Joseph Forte about his fund's condition and that he also did not disclose he was receiving a percentage of the fees as payment for helping establish the fund. The partnership lost millions and paid off early investors from funds from later investors.

The fund came to light after Forte, with the business failing as the economy soured, confessed his role. On Jan. 7, 2009, the SEC and the United States Commodities Futures Trading Commission successfully sued to freeze the fund's assets. Forte was sentenced to 15 years in prison after pleading guilty to charges of wire fraud, mail fraud, bank fraud and money laundering.

Irwin and his firm were accused of soliciting investors for Forte LP, relying on its claims of stellar returns, but not performing any due diligence. The accountant and his firm also prepared quarterly statements and tax documents, based on the false information provided by Forte, while disregarding red flags.

The SEC alleged that Jacklin paid Forte a $4,000 monthly salary from 1995 through September 1998 and that Irwin solicited investments for the partnerships from 1995 through 2008.  A suit to recover money for the victims, also claimed that from 2000 through 2008 Jacklin employed three apprentices who were purportedly learning Forte's trading method.

Investors who benefited included nonprofits served by Forte and Irwin. According to area press coverage, Forte was on the board of Hill Top Preparatory School in Rosemont which serves elementary school children with learning disabilities, and was also on the board of Malvern Preparatory. Irwin was also chairman of Hill Top's board and treasurer of the Hooper foundation.

For the three years ended July 2007, Hill Top had $1.44 million in investments in the partnership and earnings of $1.06 million. Many nonprofits received donations from Forte, including Malvern Preparatory, which is being sued because it received more than $900,000 from Forte and $200,000 from the Hooper Foundation, which was reportedly out of $15 million it had invested with Forte. Over 100 organizations had reportedly signed tolling agreements which allowed a trustee to pursue claims after the statute of limitations expires.

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