SEC has been very busy so far this year prosecuting Colorado Ponzi scheme operators.
First, on January 12, 2009, SEC entered judgments in a Colorado based Ponzi scheme that got stopped unusually early on. Complaint was originally filed on December 19, 2007 against Jarrod W. McMillin of Englewood, Colorado, individually, and d/b/a American Investors Network (NYSE:AIN), Innovative Projects, Inc. (an Arkansas corporation with its principal place of business in Greenwood Village, Colorado) dba AIN, Laurence Young of Centennial, Colorado, individually, and dba Fairweather Management and Access Funding, Anne B. Liebermann of Littleton, Colorado, and Jason A. Kolakowski of Lakewood, Colorado.
According to the complaint, 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 advertising interests were investment contracts which are securities under federal law. Among other claims, the complaint alleged there was no advertising program and that investors who received “profit” distributions were paid with funds solicited from other investors. The complaint also alleged that McMillin and Young acted as unregistered broker-dealers in connection with the offer and sale of securities.
Apparently, SEC's cases against Kolakowski and Liebermann, AIN salespeole, were not so strong and they previously reached settlements with SEC that bar Kolakowski from association with any broker or dealer for a period of three years and bar Liebermann from association with any broker, dealer, or investment adviser for a period of three years. However, defendants Jarrod W. McMillin, his Innovative Projects, Inc., and Laurence G. Young, were found guilty for being a part of the American Investors Network Ponzi scheme.
With this case over, SEC set out to file two more complaints against alleged Ponzi scheme operators based in Colorado. Thus, on February 18, 2009 SEC filed their complaint against William L. Walters, formerly of Lone Tree, Colorado, who allegedly from 2003 through 2006, raised approximately $16.8 million from more than 80 investors under the false pretense that he would invest their funds in day trading in the securities markets.
Then on April 7, 2009 SEC filed another complaint against Shawn R. Merriman of Aurora, Colorado and his firm, Market Street Advisors, for conducting a multi-million dollar Ponzi scheme through the sale of interests in at least four investment funds. The SEC also charged the funds that issued the securities. The Commission alleges that Merriman raised at least $17 to $20 million from at least 38 investors residing in such states as Colorado, Minnesota and Utah.
Oh, and let's not forget Fredric “Rick” Dryer, founder of Mile High Capital Group, who on February 20, 2009 was sentenced in Denver District Court to 132 years in state prison on charges of securities fraud, theft and violation of Colorado’s organized crime laws. Dryer was convicted last July on 44 felony counts for his role in an alleged Ponzi scheme with the now-bankrupt real estate investment company. Nice...
Is there no end to these schemes? Probably not, but with the markets in a rallying mode over the past couple of months, there is likely to be a lull in new schemes being discovered. But once the market bear crawls out of hibernation and goes out for a kill this summer, SEC wardens better be ready to catch all the Ponzi schemers running out of the woods and straight into their hands.