Earlier this week, the U.S. District Court for the District of Utah, at the behest of the Securities and Exchange Commission, handed down final judgments against two men that the SEC accused of running a scheme that defrauded investors out of more than $7 million.
The SEC’s complaint, which was filed in 2014, accused Tyson Williams and Stanley Parrish of raising more than $7 million from approximately 50 investors through the fraudulent and unregistered sale of securities in ST Ventures.
According to the SEC, Williams and Parrish allegedly told investors that ST Ventures would purchase collateralized mortgage obligations, a type of mortgage-backed security, and then leverage the CMOs to produce a “large return” for the investor within 30 to 90 days.
The SEC’s complaint further alleged that Williams and Parrish made “material misrepresentations and omissions” regarding the investment including the risk of the investment and the use of investor funds.
According to the SEC, Williams and Parrish allegedly told investors that their investment principal would “never be at risk of loss” because investing in CMOs is a “very safe and liquid investment."
Williams and Parrish also allegedly told the investors that the investors’ funds would be used only to purchase CMOs.
But that was not the case.
Instead of using investors' funds as represented, the SEC’s complaint alleged that virtually all payments made to investors, which totaled more than $1.5 million, came from new investor money.
Additionally, Williams and Parrish allegedly misappropriated over $3.5 million of investors' proceeds for their personal use.
And earlier this week, the U.S. District Court for the District of Utah ordered Williams and Parrish to pay a disgorgement of $3,111,484.89; prejudgment interest of $1,067,778.29; and a civil penalty in the amount of $130,000.
According to the SEC, both Williams and Parrish consented to the judgment, without admitting or denying the allegations in the SEC's complaint.