Two residents of New York state have been charged by the Securities and Exchange Commission with defrauding investors, many of them upstate New York residents who purchased securities and so-called “charitable gift annuities,” the SEC announced Thursday.

Eight companies associated with the two men have also been charged in the scheme that raised at least $8 million from 125 investors over a span of seven years starting in 2007, the SEC says.

The complaint filed in U.S. District Court in Syracuse names James P. Griffin, the founder and CEO of 54Freedom Inc., and James Wolle, 54Freedom’s chief financial officer and treasurer, both of Cazenovia, N.Y.

In a parallel criminal action, the U.S. Attorney’s Office for the Northern District of New York arrested Griffin earlier in July on charges of fraud and money laundering related to the charitable gift annuities.

Griffin and Wolle repeatedly misled prospective investors about the companies’ prospects, for instance by falsely claiming that they had an exclusive relationship with Lloyd’s of London and that they would publish a soccer book affiliated with the Chicken Soup for the Soul series, the SEC says. 

In addition, Griffin sold “charitable gift annuities” that he falsely claimed were backed by reputable insurance companies, according to the complaint. He diverted at least $1.2 million of investor funds to pay for corporate and personal expenses, including a boat and trips he and his wife took to Hawaii and New Zealand, the SEC says.

“We allege that Griffin and Wolle picked numbers out of thin air and even guaranteed projections to purchasers of the securities while taking undisclosed sums for themselves,” says Andrew M. Calamari, director of the SEC’s New York regional office.

In addition to 54Freedom Inc., the companies charged with fraud are 54Freedom Securities Inc., MoneyIns Inc., 54Freedom Foundation Inc., 5 Ledyard Ave. LLC, 5 Ledyard Corp. and IICNet LLC. All these companies are based in New York, while another, 54FreedomTele Inc., is based in Miami. The companies used  false advertising and false revenue projections to lure investors into buying shares and promissory notes, the SEC says.