SEC Halts $47 Million Investment Fraud at Utah-Based Pay Day Loan Businesses

FOR IMMEDIATE RELEAS

The Securities and Exchange Commission today announced it has acquired a court purchase freezing the assets of two payday that is online 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 % to their opportunities in their businesses – Impact money LLC and Impact Payment Systems LLC. Investors had been told their cash could be held in split bank reports and utilized to invest in loans that are payday other components of the businesses’ operations. But, Clark alternatively commingled investor funds into an individual pool and utilized them to help make unauthorized investments, pay fictitious profits to previous investors, and fund their own lifestyle that is lavish.

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“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 associated with the SEC’s Salt Lake Regional workplace. “Clark recruited brand brand new investors through recommendations from previous investors whom thought the Ponzi re payments they received had been actual returns on the investments and sought to generally share the profitable possibility with household 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 movie theater, bronze statues along online payday loans Vermont with other art for himself.

Based on the SEC’s problem filed in U.S. District Court when it comes to 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 trade events in several states, attending cash advance seminars, and spending salespeople to find possible investors to fulfill with Clark. He paid one salesperson more than a half-million dollars over a multi-year duration to find possible investors and attend cash advance conferences and industry events.

The SEC alleges that from at the very least March 2006 to September 2010, Clark together with effect organizations raised funds from investors when it comes to reported purposes of funding payday advances, buying lists of leads for cash advance clients, and having to pay operating that is impact’s. Effect failed to distribute a placement that is private or other document disclosing the nature regarding the investment or perhaps the dangers included to investors. The SEC’s grievance charges influence and Clark with fraudulently attempting to sell unregistered securities.

Based on 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 delivered to investors. Account statements to clients revealed annualized returns varying from 30 % to significantly more than 200 %.

The court has appointed a receiver to preserve and marshal assets for the benefit of investors in addition to the asset freeze approved late Friday. The SEC’s issue seeks a preliminary and permanent injunction since well as disgorgement, prejudgment interest and economic charges from influence and Clark.

This matter had been examined by Jennifer Moore, Justin Sutherland and Marie Elliott associated with the SEC’s Salt Lake Regional workplace, plus the litigation shall be led by Tom Melton. The SEC appreciates the help of the Utah Division of Securities in this matter.

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