SEC Halts $47 Million Investment Fraud at Utah-Based Cash Advance Businesses

Washington, D.C., March 28, 2011 – The Securities and Exchange Commission today announced so it has acquired a court order freezing the assets of two pay day loan organizations and their owner faced with perpetrating a $47 million providing fraudulence and Ponzi scheme.

Washington, D.C., March 28, 2011 – The Securities and Exchange Commission today announced so it has acquired a court order freezing the assets of two pay day loan organizations and their owner faced with perpetrating a $47 million providing fraudulence and Ponzi scheme. The SEC alleges that John Scott Clark of Hyde Park, Utah, promised investors astronomical yearly comes back of 80 % on the opportunities in their businesses – Impact Cash LLC and Impact Payment Systems LLC. Investors had been told their funds will be held in split bank reports and utilized to invest in payday advances and other components of the firms’ operations. But, Clark alternatively commingled investor funds into just one pool and utilized them to produce unauthorized investments, pay fictitious earnings to previous investors, and fund his very own luxurious life style.

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“Investors had been guaranteed returns that are extraordinary Clark ended up being really diverting their cash which will make such extraordinary personal purchases as a completely restored classic 1963 Corvette Stingray,” said Ken Israel, Director regarding the SEC’s Salt Lake Regional workplace. “Clark recruited brand brand new investors through recommendations from earlier in the day investors whom thought the Ponzi re re payments they received had been real comes back to their investments and sought to generally share the profitable possibility with family members and company associates.” The SEC alleges that along with purchasing numerous cars that are expensive snowmobiles, Clark took investor funds to buy a house movie theater, bronze statues along with other art for himself.

In accordance with the SEC’s complaint filed in U.S. District Court for the District of Utah, Clark lured at the least 120 investors into their scheme. Besides word-of-mouth referrals from previous investors, Clark additionally recruited investors by attending industry events in several states, attending loan that is payday, and spending salespeople to find possible investors to generally meet with Clark. He paid one salesperson significantly more than a half-million dollars over a period that is multi-year find prospective investors and attend cash advance conferences and industry events.

The SEC alleges that from at the least March 2006 to September 2010, Clark and also the effect organizations raised funds from investors when it comes to reported purposes of funding payday advances, buying listings of leads for cash advance clients, and having to pay Impact’s running costs. Effect would not circulate a placement that is private or other document disclosing the type associated with investment or the dangers included to investors. The SEC’s grievance charges influence and Clark with fraudulently attempting to sell unregistered securities. In accordance with the SEC’s grievance, Clark regularly changed investor account statements offered to him by Impact’s accounting department to generate artificially high yearly prices of return. The account that is altered with purported earnings had been then provided for investors. Account statements to clients revealed annualized returns varying from 30 % to significantly more than 200 per cent.

Besides the asset freeze authorized late Friday, the court has appointed a receiver to protect and marshal assets for the advantage of investors. The SEC’s grievance seeks an initial and injunction that is permanent well as disgorgement, prejudgment interest and monetary charges from influence and Clark. This matter ended up being examined by Jennifer Moore, Justin Sutherland and Marie Elliott associated with SEC’s Salt Lake Regional workplace, while the litigation will be led by Tom Melton. The SEC appreciates the help of the Utah Division of Securities in this matter.

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