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Tag: SEC Chicago Regional Office

  • URGENT >> BULLETIN >> MOVING: SEC: Ponzi Money Collateralized Credit Line Used To Fund ‘Bridal Store, A Bounty Hunter Reality Television Show, And A Soul Food Restaurant’

    “Marcum’s scheme began to unravel in mid-2013, when certain of his investors began demanding distributions. Marcum could not comply, because virtually all of his investors’ money is gone. However, Marcum has attempted to reassure his investors that their investment is secure by producing fabricated documents showing that he has purported net worth of nearly $300 million. In fact, Marcum is nearly broke, and his accounts contain less than $2,000.” — SEC complaint against John K. Marcum, Aug. 26, 2013

    americaatrisk4URGENT >> BULLETIN >> MOVING: The SEC has gone to federal court in Indianapolis to obtain an emergency asset freeze against John K. Marcum and Guaranty Reserves Trust LLC. Marcum was accused by the agency of conducting a purported day-trading Ponzi scheme that gathered $6 million, collateralizing a $3 million line of credit with Ponzi proceeds — and using the line to a fund “a bridal store, a bounty hunter reality television show, and a soul food restaurant owned and operated by the bounty hunters.”

    Investors did not know their money was being used in this fashion, the SEC alleged.

    Moreover, the SEC charged, Marcum swindled investors by targeting their retirement savings,  providing account statements showing false gains and promising a guaranteed return of the principal. Some of the money went to “pay personal expenses accrued on credit card bills, including airline tickets, luxury car payments, hotel stays, sports and event tickets, and tabs at a Hollywood nightclub.”

    And when the scheme was imploding, Marcum told existing investors that he intended to recruit new investors, setting the stage for a new round of swindling, the SEC charged.

    “Marcum tricked investors into putting their retirement nest eggs in his hands by portraying himself as a talented trader who could earn high returns while eliminating the risk of loss,” said Timothy L. Warren, acting director of the SEC’s Chicago Regional Office. “Marcum tried to carry on his charade of success even after he squandered nearly all of the funds from investors.”

    Marcum, 49, resides in Noblesville, Ind., the SEC said.

    In a particularly disturbing series of allegations, the SEC alleged that Marcum bartered his life during a conference call with investors in a bid to keep the scam afloat.

    Read the SEC statement.

  • BULLETIN: SEC Charges 2 Executives Of Purported Clean-Coal Firm In Alleged $43 Million Offering Fraud; 1 Of Them Has Conviction For Bank Fraud And Was Arrested Dec. 1 Amid Allegations He Was Flogging New Offer In Violation Of Plea Agreement

    BULLETIN: The SEC has gone to federal court in Minnesota, alleging that two executives of a clean-coal tech firm repeatedly lied to investors and that one of the executives had a conviction for bank fraud — a fact not disclosed to investors when the company was trawling for cash and using unregistered brokers to do so.

    Bixby Energy Systems Inc. raised at least $43 million from more than 1,800 investors between 2001 and 2010, the SEC charged.

    Bixby executives Robert A. Walker and Dennis L. DeSender, according to the SEC, touted the firm’s purported coal-gasification machine as “proven and operating when in fact it had substantial technological defects, did not function properly, and was at risk of self-destruction.”

    “Investors were falsely informed that Bixby’s coal gasification technology was proven, fully functional, and ready for market,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office.

    Records show that DeSender, 64, of Minneapolis, was released from federal prison in 1998, about three years prior to Bixby’s offering. He went on to work for Bixby as its CFO and COO, and also as an independent consultant, according to the SEC.

    In September 2011, DeSender pleaded guilty to a criminal charge of securities fraud that flowed from his role at Bixby, according to records. But he was arrested again on Dec. 1 “for soliciting investors for another issuer in violation of his plea agreement,” the SEC said.

    Bixby itself was charged with securities fraud in September 2011, entering into a deferred- prosecution agreement with the government after the firm accepted accountability for fraud committed by “former officers and agents” and its board ousted an individual federal prosecutors described only as an “unidentified coconspirator.”

    In its complaint today, the SEC said Walker — Bixby’s 69-year-old former president, CEO and board chairman — no longer held any titles at the firm and had “asserted his Fifth Amendment right against self-incrimination and refused to provide testimony in response to a Commission investigative subpoena.”

    Walker resides in Anoka, Minn.

    The SEC today also charged six individuals and three companies with hawking Bixby’s offering illegally.

    “Investors who purchased Bixby shares through the unregistered brokers were deprived of the protections afforded under the federal securities laws requiring the registration of broker-dealers and securities offerings like these,” Gillette said.

    The Star Tribune is reporting this afternoon that Walker has been arrested.

  • BULLETIN: SEC Halts Alleged $105 Million Ponzi Scheme Operating ‘Offshore’; Daniel Spitzer Charged In Complex International Fraud Case; Several Agencies Credited With Assisting Probe

    Saying his offshore Ponzi scheme was on the verge of collapse but still collecting money, the SEC has charged a resident of the U.S. Virgin Islands with fraud.

    Several international authorities assisted in the probe, the SEC said.

    Daniel Spitzer, a U.S. citizen who resides in St. Thomas, was charged in the scheme. The SEC said the scheme netted $105 million and roped in 400 investors, dating back “at least” to 2004.

    Spitzer is 51, and “desperate for money” to keep the scheme afloat, the SEC charged, describing him as a “purported fund manager.”

    “Daniel Spitzer ran an elaborate Ponzi scheme that he disguised by moving investor money through a complex network of foreign bank and brokerage accounts,” said Merri Jo Gillette, director of the SEC’s Chicago Regional Office. “He deceived investors into believing that he was using a sophisticated investment strategy that didn’t really exist.”

    In an emergency action in Illinois, the SEC said the scheme was on the verge of collapsing and that Spitzer still was collecting money in March to prevent its collapse. Earlier, Spitzer spent more than $900,000 “in cash at the Wynn Las Vegas Casino,” the agency said.

    “Since at least August 2009 and continuing through to the present, Spitzer has attempted to delay and avoided paying requested investor redemptions,” the SEC charged. “Spitzer is desperate for money and has continued to prey on victims.”

    Spitzer was spending money at the casino in October 2009, even as he was delaying payments to investors, according to court filings.

    Also named defendants in the case were these Spitzer-connected companies: Kenzie Financial Management Inc. of St. Thomas; Kenzie Services LLC of Nevis; Draseena Funds Group Corp., an Illinois corporation with offices in Clearwater, Fla., and Stateline, Nev.; DN Management Co. LLC of Nevada; Aneesard Management LLC, also known as Nerium Management Co. LLC of Nevada; Nerium Management Co. of Illinois; Arrow Fund LLC of Nevada; Arrow Fund II LLC of Nevada; Conservium Fund LLC of Nevada; Nerium Currency Fund LP of Nevada; Senior Strength Q Fund LLC of Nevada; SSecurity Fund LLC of Nevada; Three Oaks Advanced Fund LLC of Nevada; Three Oaks Currency Fund LP of Nevada; Three Oaks Fund 25 LLC of Nevada; Three Oaks Senior Strength Fund LLC of Nevada; and USFirst Fund LLC of Nevada.

    Just three months ago, the SEC said, Spitzer railroaded an investor for $100,000 by telling the investor the money would be used “in one of Spitzer’s more conservative investment funds.

    “Rather than invest in said fund, in April 2010, Spitzer used this investor’s money to make $9,492 in Ponzi payments to four other investors, transferred $27,102 to the First Bank of Puerto Rico, and paid $26,257 for third party expenses,” the SEC charged.

    Assisting in the probe were the U.S. Commodity Futures Trading Commission, the Irish Financial Regulator, Danish Financial Supervisory Authority, Autorité des marches financier in France, the Ontario Securities Commission and the Financial Intelligence and Investigations Unit Attached to the Royal Anguilla Police Force in Anguilla, the SEC said.