SEC Sues Sex Cruise Investment Firm

Funds used to pay for strippers, go-go dancers
By Rob Quinn,  Newser Staff
Posted Apr 21, 2010 4:52 AM CDT
The cruise company's website stressed that clothing is optional and sexual acts are permitted in designated 'playrooms.'   (Shutter Stock)

(Newser) – The bosses of an upstate New York investment firm used investors' cash to finance their own lavish lifestyles and to underwrite business ventures like a swingers' cruise line, according to an SEC lawsuit. The assets of McGinn, Smith & Co. have been frozen by court order while SEC investigators probe what they believe is a Ponzi scheme, the Albany Times-Union reports.

Investors were bilked out of a total of $136 million by the firm, the SEC alleges. The complaint states that investors were told some funds were invested in a cruise charter firm, but that the company failed to mention that the cruises were "sexually oriented, that strippers and go-go dancers would be procured to entertain passengers," and that company founder Timothy McGinn was romantically involved with the manager of the money-losing venture.

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