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Washington, D.C., March 28, 2011 вЂ“ 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 per cent on the opportunities in their businesses вЂ“ Impact Cash LLC and Impact Payment Systems LLC. Investors had been told their funds will be held in split bank reports and utilized to finance pay day loans and other facets of the businessesвЂ™ operations. But, Clark alternatively commingled investor funds into a single pool and utilized them to help make unauthorized investments, pay fictitious earnings to previous investors, and fund his very own lifestyle that is lavish.
- SEC Problem
- Litigation Release No. 21903
вЂњInvestors had been guaranteed extraordinary returns while Clark ended up being really diverting their funds to produce such extraordinary personal acquisitions as a completely restored classic 1963 Corvette Stingray,вЂќ said Ken Israel, Director associated with SECвЂ™s Salt Lake Regional workplace. вЂњClark recruited new investors through recommendations from earlier in the day investors whom thought the Ponzi re re payments they received had been actual comes back to their investments and sought to generally share the profitable possibility with family members and company associates.вЂќ
The SEC alleges that as well as purchasing numerous cars that are expensive snowmobiles, Clark stole investor funds to acquire a house 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 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 loan that is payday, and spending salespeople to find potential investors to meet up with Clark. He paid one salesperson significantly more than a half-million dollars over a period that is multi-year 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 while the effect organizations raised funds from investors for the reported purposes of funding payday advances, buying listings of leads for cash advance customers, and having to pay ImpactвЂ™s working expenses. Impact would not circulate a personal positioning memorandum or other document disclosing the character associated with investment or the dangers included to investors. The SECвЂ™s grievance charges influence and Clark with fraudulently attempting to sell securities that are unregistered.
Based on the SECвЂ™s grievance, Clark regularly altered investor account statements offered to him by ImpactвЂ™s accounting division to produce artificially high yearly prices of return. The account that is altered with purported earnings were then delivered to investors. Account statements to customers 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 SECвЂ™s complaint seeks an initial and injunction that is permanent well as disgorgement, prejudgment interest and monetary charges from influence and Clark.
This matter had been examined by Jennifer Moore, Justin Sutherland and Marie Elliott regarding the SECвЂ™s Salt Lake Regional workplace, additionally the litigation shall be led by Tom Melton. The SEC appreciates the assistance of the Utah Division of Securities in this matter.