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

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The Securities and Exchange Commission today announced so it has acquired a court purchase 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 returns of 80 per cent on the opportunities in their businesses – Impact money LLC and Impact Payment Systems LLC. Investors had been told their cash could be held in split bank accounts and utilized to invest in pay day loans and other facets of the firms’ operations. Nevertheless, Clark alternatively commingled investor funds into an individual pool and utilized them to create unauthorized investments, pay fictitious earnings to earlier investors, and fund his very own lifestyle that is lavish.

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“Investors had been promised returns that are extraordinary 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 SEC’s Salt Lake Regional workplace. “Clark recruited new investors through recommendations from previous investors whom thought the Ponzi payments they received were real comes back to their investments and sought to generally share the opportunity that is lucrative household and company associates.”

The SEC alleges that along with purchasing numerous high priced vehicles and snowmobiles, Clark took investor funds to acquire a house movie theater, bronze statues as well as other art for himself.

Based on the SEC’s complaint filed in U.S. District Court when it comes to District of Utah, Clark lured at the very least 120 investors into their scheme. Besides word-of-mouth referrals from previous investors, Clark also recruited investors by attending trade events in several states, attending pay day loan seminars, and having to pay salespeople to find possible investors to meet up with Clark. He paid one salesperson significantly more than a half-million dollars more than a period that is multi-year 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 together with Impact businesses raised funds from investors for the 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 would not circulate a personal positioning memorandum or other document disclosing the type associated with investment or perhaps the dangers included to investors. The SEC’s grievance charges influence and Clark with fraudulently attempting to sell unregistered securities.

In line with the SEC’s problem, Clark routinely altered investor account statements supplied to him by Impact’s accounting division to generate artificially high yearly prices of return. The changed account statements with purported earnings were then delivered to investors. Account statements to clients revealed annualized returns varying from 30 % to a lot more than 200 per cent.

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 online payday loans Wyoming SEC’s problem seeks an initial and injunction that is permanent well as disgorgement, prejudgment interest and economic charges from influence and Clark.

This matter ended up being examined by Jennifer Moore, Justin Sutherland and Marie Elliott of this SEC’s Salt Lake Regional workplace, and also 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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