An investigation by the Securities and Exchange Commission has led to the resignation of an outside director for some of the Dreyfus mutual funds. Martin Fife resigned his director posts on April 11, less than a week after the SEC obtain a restraining order against Fife and at least three others for their role in a $52 million Ponzi scheme.

Dreyfus and its parent Mellon Financial played no role in the scheme, nor have they been accused of any wrongdoing. Dreyfus clarified that Fife's only attachment to the firm was through his outside director position at several of the Dreyfus mutual funds. The SEC claims that British citizen Michael Clarke promised investors returns of up to 300 percent returns in as few as 12 business days through "credit enhancement" and "balance sheet enhancement" investments. Those schemes claimed that funds would be invested in T-bills in margin accounts managed by Fife through his Brite Business. The alleged scam lasted from 1999 to 2002.

The SEC also alleges that Fife told one investor that his funds were "absolutely safe" and that his trading program had been successful when, in fact, Fife had already lost a significant amount of investor funds in his trading program.

Altogether, the SEC claims Clarke and Fife misappropriated, transferred or lost approximately $13 million in investor funds from 1999 to 2001.

Also named in the allegations are Dennis Herula, a former Raymond James broker, Mary Lee Capalbo, a Rhode Island attorney, Charles Sullivan, a scion of the family that formerly owned the New England Patriots. 

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