Two online pay day loans businesses owned by the very same person have been hit with a fraud suit. The suit was brought in federal court by the Securities and Exchange Commission. The alleged perpetrator is John Scott Clark, of Utah. He has been alleged to have run a multimillion dollar Ponzi scheme using the two online financial services businesses he owns. Clark is alleged to have stolen $47 million from more than 120 investors.
Fraud suit given to lending companies by Securities and Exchange Commission
The SEC sued the owner of two lending online payday cash advance companies for a Ponzi scheme costing millions of dollars. The Securities and Exchange Commission sued John Scott Clark, of Cache County, Utah, for defrauding more than 120 investors over a period of five years in return for investing capital into two companies that he owned, Impact Cash LLC and Impact Payment Systems LLC, according to the Salt Lake Tribune. Clark allegedly recruited investors by promising an average return of 80 percent in exchange for capital, which he allegedly said would be used to fund payday cash loans to reliable consumers. Investors paid over $47 million for the operation between March 2006 and Sept 2010, states the Credit Union Times. Supposedly, the investors were convinced of this scheme.
Clark accused of funding Mercedes habit with investor funds
Clark would gain the confidence of investors and allegedly use new investment funds to pay dividends to initial investors and fund his lifestyle, according to Deseret News. A 1963 Chevrolet Corvette and three Mercedes-Benz cars were purchased by Clark during this period. He also purchased many home furnishings including a $25,000 theater system. Some of his investors were growing suspicious by 2009 and asked Clark to sell their stake in his businesses and turn the proceeds over, which he refused to do. Eventually, the Securities and Exchange Commission became involved, slapping Clark with a lawsuit alleging five different violations of the Securities Act. The Wall Street Journal reports that the Impact companies were put into receivership and were frozen by a Federal judge.
One ruins it for all
Most people have a bad connotation of online personal loan companies. They’re considered evil. That is far from the case, however transactions that are completed fairly and honestly do not go widely reported. The people you give money to need to be trusted. Be careful about it. This is where the Better Business Bureau comes in. It’s there to help customers. An informed consumer will always be in a position to make a better decision, and something that sounds too good to be true usually is.
Information from
Salt Lake Tribune
sltrib.com/sltrib/money/51503972-79/investors-clark-complaint-payday.html.csp
Wall Street Journal
online.wsj.com/article/BT-CO-20110328-710072.html
Deseret News
deseretnews.com/article/705369480/Cache-County-man-allegedly-bilked-investors-of-millions-to-feed-lavish-lifestyle.html
Credit Union Times
cutimes.com/2011/03/28/sec-halts-47-million-payday-loan-ponzi
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