SEC Files Settled Action Against Restauranter – Adviser

During the third quarter of 2021 the Commission’s enforcement program brought a large array of actions involving a variety of claims and persons. While typically a large percentage of cases are concentrated in a few areas such as offering frauds and microcap fraud, the third quarter was different. During that period the enforcement program brought actions that were, for the most part, not concentrated in the more traditional areas. Despite the broad array of actions initiated, offering frauds was still a focus area. The case below, filed this week, is typical of those actions.

SEC v. Vick, Civil Action No. 1:21-cv-02870 (D. Colo. Filed October 25, 2021) is a case which names as defendant Ann Vick. She is the owner of AMV Investments LLC and the operator of a chain of restaurants in Colorado.

Despite a background that centers on food service rather than investments, Ms. Vick was able to raise substantial sums of money which was put into AMV, a pooled investment vehicle. Specifically, in a period of months, beginning in August 2018, she was able to raise at least $3.2 million from over two dozen investors. The sales pitch was straight forward: Ms. Vik promised investors monthly interest payments ranging from 5-10% or 60-120% annually.

The profits were to come from options trading. Yet from about December 2019 through early 2020 the trading results were abysmal. Ms. Vick’s trading generated losses. She added to the investor losses by misappropriating hundreds of thousands of dollars of investor money. Since there were no trading profits to pay investors the promised returns, she began paying investors with funds raised from other investors – Ponzi type payments.

Despite the losses, Ms. Vick was able to raise another $1.3 million from new investors over a several month period, beginning in May 2020. The sale pitch was again straight forward: Potential investors were told that her options trading was extremely profitable. No mention was made of earlier losses; no mention was made of the stolen funds. The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Advisers Act Sections 206(1), 206(2) and 206(4).

To resolve the case Ms. Vick consented to the entry of permanent injunctions based on the Sections cited in the complaint. She also agreed to pay disgorgement of $570,150, prejudgment interest of $27,929 and a penalty equal to the amount of the disgorgement. See Lit. Rel. No. 25246 (October 26, 2021).

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