Art Laffer, a Reagan administration adviser behind the popular tax-slashing theory called the Laffer Curve, has been sued for lending his name to an investment group that allegedly ran a Ponzi scheme through a talk radio company.
Laffer is credited with the theory that cutting taxes will increase government revenue and supporter of presidential candidate Newt Gingrich.
A much sought-after economist among Republican and conservative circles, Laffer sold his name to investment funds created by his co-defendants, David Wallace and Costa Bajjali. The funds pumped money into a business radio company called BizRadio in 2006, as did Laffer's own fund a year later. Laffer also co-hosted a BizRadio program.
The BizRadio business was a Ponzi scheme constructed with the support of defendants, the suit, filed Wednesday in Texas court, said. Mr. Laffer lent his name to Wallace and Bajjali for a fee to increase the credibility of their offerings, and effectively vouched for the credibility of the [investment funds].
The suit says BizRadio never generated enough revenue from selling airtime and was never viable.
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Efforts to pump money into BizRadio caught the eye of the Securities and Exchange Commission in 2009 when BizRadio's co-founder, Albert Kaleta, was sued for selling securities and diverting the money to the business.
An employee at Laffer Associates told Courthouse News Wednesday that Laffer is no longer associated with the fund that invested in BizRadio, called Laffer Frishberg Wallace Economic Opportunity Fund.
He was affiliated with them at one time, but he's not anymore, the employee told the legal publication.