Two online pay day loans lending businesses and the owner of both businesses have all been named in a SEC lawsuit in Federal Court, alleging fraud. The man at the center of the suit, John Scott Clark, is named in the suit for having allegedly run a multimillion dollar Ponzi scheme using the two companies he owned. Clark is alleged to have stolen $47 million from more than 120 investors.
New fraud suit against online lending companies
The owner of two companies involved in lending payday loans online has been sued by the Securities and Exchange Commission for running a multimillion-dollar Ponzi scheme. 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. An average return of 80 percent was promised to investors which supposedly would come from reliable customers that are getting pay day loans with the cash, Clark said. From March 2006 to September 2010, Clark recruited investors and got over $47 million, reports the Credit Union Times, in investment.
Purchasing Mercedes with Clark's 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 vehicles were purchased by Clark during this period. He also purchased several home furnishings including a $25,000 theater system. Clark refused to give investors their money when they started to get suspicious in 2009 that something was wrong. Clark got a lawsuit with five Securities Act violations by the Securities and Exchange Commission. The Wall Street Journal reports that the Impact businesses were put into receivership and were frozen by a Federal judge.
One ruins it for all
A lot of people have a bad connotation of online payday lenders. They’re considered evil. That is far from the case, but transactions that are completed fairly and honestly don’t go widely reported. The individuals you give money to have to be trusted. Be careful about it. There’s a reason why the Better business Bureau and other companies are around. An informed customer will always be in a position to make a better decision, and something that sounds too good to be true typically is.
Citations
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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