SEC Moves Against Triton Financial After Woman With Gun Showed Up At Firm’s Texas Office To Demand Refund; Alleged Fraud Scheme Embarrasses NFL, Heisman Trophy Winners, PGA Champions Tour

A case in Texas may provide the clearest sign yet that securities fraud in the United States is separating people from their senses — not that law enforcement missed the important clues provided by an earlier case in California in which investors who were purportedly fleeced allegedly posed as federal agents and attempted an armed coup at the company that allegedly ripped them off.

Now comes word that fleeced Texas investor Christine Cayton became so angry at being hoodwinked out of her retirement savings that she got drunk on wine earlier this month, took an unloaded gun to the headquarters of Triton Financial LLC and demanded a refund from Triton principal Kurt B. Barton.

Visit KXAN to watch Christine Cayton video

Cayton did not shoot anyone, but was said to be fumbling for bullets in her purse. She was arrested on a felony weapons charge, and since has posted bond. She explained her state of mind to NBC affiliate KXAN. (See KXAN video. )

Triton, according to Sports Illustrated, initially responded to Cayton’s arrest by issuing a brief statement questioning her mental health,  but now the SEC and the Texas State Securities Board (TSSB) — both of which had been investigating Triton and Barton — have filed actions that raise troubling concerns about Triton’s corporate mental health and whether professional athletes will push any product for a fee.

First, the answer to the question PP readers may have about why Triton became fodder for a Sports Illustrated story is that Triton used former National Football League players and former Heisman Trophy winners in sales and marketing promotions, and also sponsored a golf event on the PGA Champions Tour.

None of the athletes has been accused of wrongdoing.

Triton appears to have defaulted on its PGA contract during the very first year — at the same time the golf world finds itself suddenly confronting a PR disaster caused by the Tiger Woods scandal and residual fallout from a PR disaster caused by alleged Ponzi schemer Allen Stanford, whose company sponsored a signature PGA Tour event.

Questions about Triton’s corporate mental health came to the fore when investigators discovered the company was promoting investment returns as high as 32 percent and a complex scheme that involved an insurance company, a diverted offering, promissory notes and the unauthorized pooling of funds.

“Since at least 2004, Triton has sponsored more than 40 limited partnerships and limited liability companies, raising over $50 million for these ventures,” the SEC said.

An entity known as Triton Insurance issued a Confidential Investment Memorandum (CIM) that outlined a $12 million offering of 240 investor units at $50,000 per unit. The offering pertained to yet another Triton company — Triton Holdings — whose purpose “was to acquire and turn around underperforming insurance companies,” the SEC said.

Triton identified National States Insurance Co. (NSIC) as a company it intended to acquire through the offering, the SEC said.

But unbeknown to Triton Insurance investors, “Barton had put the NSIC acquisition on indefinite hold around October 2008” and Triton “did not return the funds raised to investors or hold them for future acquisitions.

“Instead, Barton and Triton Insurance misapplied the funds to pay the expenses and obligations of Triton and its affiliates,” the SEC said.

Proceeds gathered from investors for the NSIC acquisition were combined with proceeds from other Triton entities and promissory notes to acquire a Nebraska company known as Axis Capital, an equipment-leasing firm, contrary to the purpose of the Triton Insurance offering, the SEC said.

“After the Axis acquisition, Defendants continued to sell Triton Insurance investor units, raising over $2 million, using the Original CIM,” the SEC said. “The CIM nowhere disclosed the Axis purchase, but instead described only the NSIC acquisition. Investors also were not told that Triton continued to divert offering proceeds.”

One former NFL player purportedly sent an email “to numerous NFL alumni ‘updating’ them on Triton’s activities and touting Triton’s returns on its investments,” the SEC said in fraud allegations filed against Triton and Barton yesterday.

The word “Ponzi” has not been used yet, but some of the behavior attributed to Triton by the SEC and the TSSB is creating plenty of bad press for the NFL and the PGA Tour.

Professional sports has been no stranger to headlines about financial fraud in recent months. In November, former Denver Broncos quarterback John Elway, a member of the Pro Football Hall of Fame, got some embarrassing ink for speaking at events hosted by Speed of Wealth LLC, which was implicated  in an alleged $30 million Ponzi scheme.

In February, PGA Tour Commissioner Tim Finchem found himself in the position of having to tackle his first sudden PR nightmare of the year: the Ponzi allegations against Allen Stanford, sponsor of the Stanford St. Jude Championship, which raises millions of dollars for the St Jude Children’s Research Hospital in Memphis.

Stanford is jailed in Texas, awaiting trial. So ruinous was Stanford’s name — and so important was the tournament to the hospital, the Memphis region in general and the PGA’s rich history — that the PGA Tour proceeded with the event despite having no title sponsor.

After Triton got up a head of PR steam by recruiting famous football players such as Tony Dorsett, Jeff Blake, Ty Detmer and Chris Weinke as pitchmen, providers of testimonials or employees, it then expanded into sponsoring a PGA Champions Tour event in Texas, sucking the golf world into its alleged scheme.

Sports Illustrated broke the Triton story in March, but it gained little media attention elsewhere. Yesterday, however, both the SEC and the TSSB announced dramatic legal actions — and those actions put both the NFL and the Champions Tour in the difficult position of seeing their famous brands associated with a large-scale fraud scheme.

Read the SEC complaint.

Read a TSSB filing that alleges Triton tried to thwart a state investigation into its business practices by providing bogus and altered documents.

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5 Responses to “SEC Moves Against Triton Financial After Woman With Gun Showed Up At Firm’s Texas Office To Demand Refund; Alleged Fraud Scheme Embarrasses NFL, Heisman Trophy Winners, PGA Champions Tour”

  1. And the shoes just keep dropping. Makes you wonder how many more shoes will drop before the end of 2009, and how many will greet the New Year. If the past is any indication, there is a whole shoe store still waiting to drop.

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  2. The other question that this latest event raises is this:

    Is ASD head, Andy Bowdoin, who appears to be unaccessible to his membership, hiding from the US Government or his own members? Some of the ASD members have suffered terrible losses which have permanently damaged their lives nand those of their families. Some of them are very very angry with Mr. Thomas “Andy” Bowdoin. Some of them live in the South of Florida.

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  3. Alasycia…..I am one of those angry members living in South Fla. I attended the Miami Rally along with other participants and we were all ready to delve into this program with both feet, however, after I made a purchase of ad packs and saw that the card was processed by an overseas processor I became very concerned and as we all know things went downhill fast after that point. What really galls me is the Christmas card I received form ‘Andy’…..What a friggin joke!!! The only gift Andy should get (and the cronies who supported him) for Christmas is about 50 years of jail time…and his family as well!!! Any man who calls himself a christian and uses people like he did is not too many steps below Jim Jones( of the Jonestown massacre). The only difference is Bowdoin’s act was a financial massacre for the members.

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  4. Hi Paul,

    First of all, my sympathies are with all those, like you, who were sucked into ASD through the their rallies.

    Living overseas, it was a while before it became clear about the style of the rallies that were taking place, and taking over the culture at ASD. It was not popular with some of us older members who had been sucked into an advertising company with a great return – but for the wrong reasons. We were concerned it messed up the smooth operation of the company and that it was turning ASD into an investment opportunity. lol With the benefit of hindsight, it is obvious that this was a strategy deliberately followed by the owner and inner core to raise money, but at the time we couldnt figure out why they were causing avoidable bottlenecks in the company’s operations.

    I am afraid that the comment about “South Florida” was an unsubtle reference to the less attractive and criminal element population for which Miami has also become famous.

    Your comments about the Christmas email are shared by most. The best Christmas present for many of us would be to see justice done and jail sentences handed out to all those responsible for the financial massacre that was called AdSurfDaily. They will have to start jailing the “enablers” and insider promoters of the autosurf schemes before there is an effective deterrent to stop their proliferation on the internet.

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