A federal judge on Wednesday froze the assets of several Utah companies and their officers involved in an alleged Ponzi scheme in which at least 50 investors forked over more than $4.8 million.
Investors were told their money would be invested in "hard money lending," real estate and foreign currency futures and stocks, according to court documents filed by the U.S. Securities and Exchange Commission.
However, the SEC said most of the money was instead used to make interest payments to investors and was used for personal expenses such as making mortgage payments, paying credit card bills and buying a swimming pool.
U.S. Judge Paul Cassell granted a temporary restraining order and asset freeze against Novus Technologies LLC, based in Woods Cross, and RCH2 LLC, based in Draper. Other companies that received funds as a result of the alleged fraud included U.S. Ventures LC and U.S. Ventures International LLC, both based in Salt Lake City, and Online Strategies Group, a Nevada company. Those companies also are subject to the asset freeze, said Kenneth Israel, district administrator of the SEC's Salt Lake office.
"We will be asking for disgorgement of any of that money," Israel said. "The freeze order will freeze their bank accounts and freezes any assets they have."
Israel said all of the investors were Utah residents. Investors could see some of their money returned if enough is recovered, he said.
Named defendants included Ralph W. Thompson Jr., managing member of Novus, who conducted weekly investor meetings on behalf of Novus; Duane C. Johnson, point contact for Novus' real estate and portfolio development; Robert Casey Hall, who solicited investors on behalf of RCH2; and Eric J. Wheeler. The SEC named Robert L. Holloway, manager of US Ventures and USVI, and David Story, who controlled an online account that received funds from Novus and RCH2, as relief defendants.
Calls by the Deseret Morning News to Novus Technologies, Thompson and Johnson were not returned by deadlines Wednesday.
Court documents said Novus and RCH2 sold unregistered securities. The companies entered into six-month promissory notes with investors promising a guaranteed 3 percent to 15 percent interest per month.
"What really offended us was they knew that we were looking at them," said Wayne Klein, director of the Utah Division of Securities. "They promised to stop doing it, and yet they continued to hold meetings. That's part of the reason why we joined forces with the FBI and SEC."
Klein said the division received a number of complaints against Novus. Some investors chose to work with the division, attending the investment pitches while outfitted with a wired tape recorder.
Diana Parrish, investigator with the division, said investors were promised guaranteed returns and told their funds were safe.
Israel said he has seen much larger Ponzi schemes.
"This is the first one we have brought here in a while," Israel said. "We brought one a few years ago that was around $200 million."
E-mail: danderton@desnews.com