Editor’s Note: This story was suggested by reader Tony H., who pointed us to an SEC News Release on the dismantling of yet another Ponzi scheme.
Two principals of the American Investors Network (AIN) have been ordered to pay more than $1.4 million for foisting on investors an upstart advertising company that proved to be nothing more than their key to Ponzi riches.
A federal judge declared Jarrod W. McMillin and Innovative Projects Inc. “jointly and severally liable” to pay back hundreds of thousands of dollars, including penalties and interest, for advancing the Ponzi.
Judge Robert E. Blackburn of U.S. District Court for the District of Colorado entered a final judgment last week against McMillin and Innovative Projects.
“The final judgment finds McMillin and Innovative Projects, Inc. jointly and severally liable for disgorgement in the amount of $673,983 representing profits from the conduct alleged in the Commission’s complaint plus pre-judgment interest of $19,349, for a total of $693,332,” the SEC said. “The Judgment also finds McMillin liable for a civil penalty in the amount of $130,000.”
It was the second time the court ordered disgorgement against a Ponzi participant in the Innovative Projects case.
On Dec. 22, Laurence G. Young was ordered to pay “$282,103 representing profits from the conduct alleged in the complaint, prejudgment interest of $16,698, and a civil penalty of $282,102, for a total of $580,903,” the SEC said.
“AIN solicited funds to finance an advertising program and promised to return monthly profits of $10,000 to $20,000 on each $2,000 investment,” the SEC said. “The advertising interests were investment contracts which are securities under federal law.”
Among other claims, the SEC said “there was no advertising program and that investors who received ‘profit’ distributions were paid with funds solicited from other investors.”
Investigators also alleged McMillin and Young acted as unregistered broker-dealers in connection with the offer and sale of securities.