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

•   Jan, 05, 2021
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The Securities and Exchange Commission today announced it has obtained 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 % to their investments 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 pay day loans and other areas of the businesses’ operations. But, Clark alternatively commingled investor funds into an individual pool payday loans in Wyoming and utilized them to create unauthorized investments, pay fictitious earnings to previous investors, and fund their own lifestyle that is lavish.

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“Investors had been guaranteed returns that are extraordinary Clark had been really diverting their funds in order to 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 new investors through recommendations from earlier in the day investors whom thought the Ponzi payments they received were real comes back on the investments and sought to generally share the profitable possibility with family members and business associates.”

The SEC alleges that as well as purchasing numerous cars that are expensive snowmobiles, Clark stole investor funds to buy a house movie movie theater, bronze statues as well as other art for himself.

According to the SEC’s problem filed in U.S. District Court for the District of Utah, Clark lured at the very least 120 investors into their scheme. Besides word-of-mouth referrals from earlier in the day investors, Clark also recruited investors by attending industry events in different states, attending cash advance seminars, and having to pay salespeople to find prospective 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 trade events.

The SEC alleges that from at the least March 2006 to September 2010, Clark and also the effect businesses raised funds from investors when it comes to reported purposes of funding payday advances, buying listings of leads for pay day loan clients, and having to pay operating that is impact’s. Effect didn’t circulate a personal positioning memorandum or other document disclosing the character for the investment or 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 issue, Clark regularly changed investor account statements supplied to him by Impact’s accounting division to produce artificially high yearly prices of return. The changed account statements with purported earnings were then provided for investors. Account statements to customers showed 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 an initial and injunction that is permanent well as disgorgement, prejudgment interest and monetary penalties from Impact and Clark.

This matter ended up being examined by Jennifer Moore, Justin Sutherland and Marie Elliott regarding the SEC’s Salt Lake Regional workplace, plus the litigation will be led by Tom Melton. The SEC appreciates the assistance of the Utah Division of Securities in this matter.

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