Washington, D.C., March 28, 2011 вЂ“ 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 comes back of 80 % to their opportunities in their businesses вЂ“ Impact money LLC and Impact Payment Systems LLC. Investors had been told their funds could be held in split bank records and utilized to finance loans that are payday other areas of the firmsвЂ™ operations. Nonetheless, Clark alternatively commingled investor funds into an individual pool and utilized them in order to make unauthorized investments, pay fictitious earnings to previous investors, and fund his very own luxurious life style.
вЂњInvestors were guaranteed extraordinary returns while Clark had been really diverting their cash to help make such extraordinary personal acquisitions as a completely restored classic 1963 Corvette Stingray,вЂќ said Ken Israel, Director associated with SECвЂ™s Salt Lake Regional Office. вЂњClark recruited brand brand new investors through recommendations from earlier in the day investors whom thought the Ponzi re payments they received had been real comes back on the investments and sought to generally share the opportunity that is lucrative household and company associates.вЂќ
The SEC alleges that along with purchasing numerous costly automobiles and snowmobiles, Clark took investor funds to get 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 when it comes to District of Utah, Clark lured at the very least 120 investors into their scheme. Besides word-of-mouth referrals from earlier in the day investors, Clark additionally recruited investors by attending trade events in different states, attending loan that is payday, and spending salespeople to find possible investors to fulfill with Clark. He paid one salesperson significantly more than a half-million dollars over a multi-year duration to find possible investors and attend payday loan conferences and industry events.
The SEC alleges that from at the very least March 2006 to September 2010, Clark plus the effect businesses raised funds from investors when it comes to reported purposes of funding payday advances, purchasing lists of leads for cash advance clients, and having to pay operating that is impactвЂ™s. Effect failed to circulate a placement that is private or just about any other document disclosing the type regarding the investment or the dangers included to investors. The SECвЂ™s grievance charges influence and Clark with fraudulently attempting to sell securities that are unregistered.
In line with the SECвЂ™s issue, Clark routinely changed investor account statements offered to him by ImpactвЂ™s accounting department to produce artificially high yearly rates of return. The changed account statements with purported earnings had been then provided for investors. Account statements to clients revealed annualized returns varying from 30 % to significantly more than 200 per cent.
As well as the asset freeze authorized late Friday, the court has appointed a receiver to protect and marshal assets for the advantage of investors. The SECвЂ™s problem seeks a preliminary and permanent injunction since 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 associated with SECвЂ™s Salt Lake Regional workplace, plus the litigation site web shall be led by Tom Melton. The SEC appreciates the help of the Utah Division of Securities in this matter.