Las Vegas Businessman Charged With $1.6 Million Ponzi Scheme
Las Vegas Businessman Charged With $1.6 Million Ponzi Scheme
LAS VEGAS – On February 21, 2012, the Securities and Exchange Commission announced that it had charged Steven L.
SEC
Hamilton and his companies Covenant Capital Partners, Verde FX Nevada LLC and Verde Retirement LLC with running a series of illegal Ponzi schemes that cheated 23 or more investors out of $1.6 million.
According to the SEC’s complaint, investors were misled into investing funds in his companies by misrepresentation of their end use and the security for the funds advanced. From 2007 through January 2011, Hamilton used personal solicitation and Internet advertising through Loopnet.com, a real estate advertising website, as the means to lure investors into his schemes.
Verde FX investors were told that their money was being pooled for participation in the construction of a new FedEx distribution outlet in Las Vegas, Nevada, for which a signed lease had been obtained from FedEx. According to a circular issued by Hamilton, the investors would earn yields of over 9% from the lease rent of the facility. About $75,000 was raised from at least three investors.
Verde Retirement investors were drawn to the scheme through the Verde website which offered them an option to invest either in a portfolio of real estate loans secured by a first priority security interest and containing notes and deeds of trust on real properties, or Certificates of Deposit which could “earn 5x more than a comparable term current bank CD” and which were secured by “highly conservative senior loans against high quality, income producing commercial real estate.” Verde Retirement raised about $642,600 from at least 14 investors, charged the SEC.
Investors in Covenant Capital were told that they had invested in bank loans secured by real estate through a pooled investment vehicle that privately placed up to $10,000,000 of Senior Secured Notes paying 20% annual interest.
About six investors, who were lured via personal solicitation or through the Loopnet website, invested approximately $952,500 in Covenant Capital.
In fact, none of the $1.6 million Hamilton raised was used for the stated purposes – instead he returned capital to investors and paid his personal living expenses out of the funds, according to the Commission
Permanent injunctions are sought by the SEC against Hamilton and his three companies, and disgorgement, civil penalty, and prejudgment interest against Hamilton himself, for violations of Sections 5(a), 5(c), and 17(a) (1), 17(a) (2), and 17(a) (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
