SEC Halts $47 Million Investment Fraud at Utah-Based Cash Advance Businesses
FOR IMMEDIATE LAUNCH
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 per cent on the assets in the businesses
– Influence Cash LLC and Influence Payment Systems LLC. Investors had been told their funds is held in split bank records and utilized to invest in loans that are payday other areas of the businesses’ operations. Nonetheless, Clark alternatively commingled investor funds into an individual pool and utilized them to produce unauthorized investments, pay fictitious earnings to previous investors, and fund their own luxurious life style.
- SEC Problem
- Litigation Release No. 21903
“Investors had been guaranteed extraordinary returns while Clark ended up being really diverting their funds to help make such extraordinary personal acquisitions as a completely restored classic 1963 Corvette Stingray, ” said Ken Israel, Director regarding the SEC’s Salt Lake Regional workplace. “Clark recruited brand new investors through recommendations from previous investors whom thought the Ponzi re re payments they received had been actual comes back on the investments and sought to generally share the opportunity that is lucrative family members and company associates. ”
The SEC alleges that along with purchasing numerous high priced automobiles and snowmobiles, Clark took investor funds to get a home movie movie theater, bronze statues along with other art for himself.
In line with the SEC’s problem 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 earlier in the day investors, Clark additionally recruited investors by attending industry events in several states, attending loan that is payday, and having to pay salespeople to find possible investors to fulfill with Clark. He paid one salesperson significantly more than a half-million dollars more than a multi-year duration to 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 additionally the effect businesses 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 operating that is impact’s. Effect would not circulate a placement that is private or virtually any document disclosing the type associated with the investment or perhaps the dangers included to investors. The SEC’s grievance charges influence and Clark with fraudulently attempting to sell securities that are unregistered.
In line with the SEC’s problem, Clark regularly changed investor account statements supplied to him by Impact’s accounting division to produce artificially high annual prices of return. The changed account statements with purported earnings were then provided for investors. Account statements to clients revealed annualized returns varying from 30 % to significantly more than 200 %.
Aside from 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 permanent injunction since well as disgorgement, prejudgment interest and monetary charges from influence and Clark.
This matter had been investigated by Jennifer Moore, Justin Sutherland and Marie Elliott regarding the SEC’s Salt Lake Regional Office, together with litigation will be led by Tom Melton. The SEC appreciates the assistance of the Utah Division of Securities in this matter.
To find out more about that enforcement action, contact:
Kenneth D. Israel, Regional Director
Karen Martinez, Assistant Director
SEC’s Salt Lake Regional Office
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