The Securities and Exchange Commission today announced it has acquired a court purchase freezing the assets of two online payday 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 returns of 80 % to their opportunities in his businesses вЂ“ Impact money LLC and Impact Payment Systems LLC. Investors had been told their funds could be kept in split bank records and used to finance payday advances and other areas of the firmsвЂ™ operations. Nonetheless, Clark alternatively commingled investor funds into an individual pool and used them in order to make unauthorized investments, pay fictitious earnings to previous investors, and fund his or her own lifestyle that is lavish.
вЂњInvestors had been promised returns that are extraordinary Clark had been really diverting their cash to produce such extraordinary personal acquisitions as a totally restored classic 1963 Corvette Stingray,вЂќ said Ken Israel, Director of this SECвЂ™s Salt Lake Regional workplace. вЂњClark recruited brand brand new investors through recommendations from previous 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 household and company associates.вЂќ
The SEC alleges that along with purchasing numerous cars that are expensive snowmobiles, Clark took investor funds to acquire a property movie theater, bronze statues as well as other art for himself.
In line with the SECвЂ™s problem filed in U.S. District Court for the District of Utah, Clark lured at the very least 120 investors into his scheme. Besides word-of-mouth referrals from earlier in the day investors, Clark also recruited investors by attending industry events in various states, attending cash advance conferences, and having to pay salespeople to find prospective investors to satisfy with Clark. He paid one salesperson significantly more than a half-million dollars more than a multi-year duration to find possible 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 organizations raised funds from investors when it comes to stated purposes of funding payday advances, buying listings of leads for cash advance clients, and having to pay ImpactвЂ™s working expenses. Effect failed to circulate a personal positioning memorandum or just about any other have a glimpse at this weblink document disclosing the character of this investment or the dangers included to investors. The SECвЂ™s grievance charges Impact and Clark with fraudulently attempting to sell securities that are unregistered.
In accordance with the SECвЂ™s grievance, Clark regularly changed investor account statements offered to him by ImpactвЂ™s accounting division 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 per cent.
Besides the asset freeze authorized late Friday, the court has appointed a receiver to protect and marshal assets for the main benefit of investors. The SECвЂ™s issue seeks an initial and permanent injunction since well as disgorgement, prejudgment interest and monetary charges from Impact and Clark.
This matter had been examined by Jennifer Moore, Justin Sutherland and Marie Elliott associated with the SECвЂ™s Salt Lake Regional workplace, while the litigation will be led by Tom Melton. The SEC appreciates the assistance of the Utah Division of Securities in this matter.