A Greek businessman named in an SEC complaint against Guy W. Gane Jr., the Amherst financial adviser accused of running a $5.7 million Ponzi scheme, said he, too, was a victim of Gane's Watermark group.
Konstantinos "Kostas" Samouilidis, 58, of Palm Beach Gardens, Fla., said he was prepared to invest millions of dollars from his family's trust in Greece before the SEC shut down Gane's business last May.
"I along with many others was deceived by Guy W. Gane Jr. and his related companies [Watermark] into believing I was doing business with a reputable business entity," Samouilidis said in a sworn affidavit filed this week in U.S. District Court.
"As has been exposed by the SEC's investigation and prosecution of this action," he said, "it appears that Watermark was conducting a Ponzi scheme and that had I invested the family trust funds, as I intended, all would have been lost."
The SEC, however, doesn't share Samouilidis' opinion.
The agency cited Samouilidis' company, Denkon, along with Gane's two children, as relief defendants in the SEC action, accusing them of receiving ill-gotten gains from Watermark and M-One.
Denkon received more than $600,000 from Gane's company, the SEC said in its complaint. Guy W. Gane III received $18,720, and his sister, Jenna Gane, received $15,712, according to the SEC.
Samouilidis is the second person named in the SEC complaint to turn against Gane.
Gane's co-defendant, company vice president Lorenzo Altadonna, 35, said through his attorney that he and his family also lost money in Watermark, and that he also considered himself one of Gane's victims.
Gane, 53, despite an asset freeze and the SEC injunction, was running another business -- The Covenant Network, a buying club for evangelical Christians -- when a Buffalo News reporter stopped at his Sweet Home Road office last week.
The SEC asked a federal judge last week to hold Gane in contempt of court for violating the preliminary injunction.
Gane declined comment through his attorney, who also represents Gane's children.
Paul V. Nunes, a Rochester attorney representing Samouilidis, said his client borrowed $600,000 from Gane's company but had always intended to repay the money. His client has agreed to an SEC repayment schedule.
"He's almost paid back a half million dollars already," Nunes said of Samouilidis.
Nunes filed a motion trying to have U.S. District Judge William M. Skretny give Samouilidis more time to repay the remaining $189,000. He said political unrest in Greece has made it difficult for Samouilidis to get the remaining money.
His attorney said the unrest in Greece was the reason Samouilidis borrowed money from Watermark and Gane in the first place.
"My family is fortunately independently wealthy," Samouilidis said in a court affidavit. "We have significant assets in excess of many millions in Greece, my country of origin."
Samouilidis lives in a $960,000 home in Palm Beach Gardens, Fla., and his company, Denkon -- the name is formed from the first three letters of his wife's and his first names -- operated a postal and copying franchise called Post-Net.
His attorney said an SEC claim that Denkon is a motorcycle parts company is false.
Samouilidis described his financial problems to a restaurant owner in the Florida plaza where Post-Net is located, and the owner, Vincenzo Altadonna, introduced him to his son Lorenzo, Gane's vice president.
Samouilidis borrowed $600,000 from Watermark to rescue his business, his lawyer said, and in turn was prepared to invest $3 million of his family's money in Watermark.
Samouilidis said that Gane came to Greece, that he wanted to rent an office in a family-owned building, and that Samouilidis spent $116,000 renovating the office.
At one point, Samouilidis came to Buffalo and met with Watermark investors at Altadonna's house in Wheatfield to talk about his planned investment in Watermark.
"Some people wanted to make sure Kostas was real," his attorney said.
"Kostas is a good and decent guy who was not as directly damaged as many of the innocent investors are," he said, "but he's damaged to be sure."