The U. S. Securities and Exchange Commission (SEC) charged Daryl F. Heller of Pennsylvania and his companies, Prestige Investment Group, LLC and Paramount Management Group, LLC, with operating a multi-year Ponzi scheme that resulted in investor losses of approximately $400 million.
The SEC’s complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, charges Heller, Prestige, and Paramount with violations of the antifraud provisions of Section 17(a) of the Securities Act 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The complaint alleges that over a period of seven and a half years, Heller and Prestige raised more than $770 million from approximately 2,700 investors, many of whom are retail investors and members of the Amish and Mennonite communities in the Lancaster, Pennsylvania area, to invest in ATMs operated by Paramount, promising them an approximately 25% return from fixed monthly distributions from income earned from pooled ATM transaction fees and related charges. They solicited investors through email, podcasts, YouTube videos, meetings, seminars, and investor presentations.
Per the SEC’s court allegations, Heller used his control of Prestige and Paramount to create the false impression that they were running a successful, nationwide ATM network and paying investors fixed monthly distributions from income earned from ATM transaction fees and related charges. The defendants, in fact, misrepresented the size and profitability of the ATM network and paid distributions to investors primarily using money from new investments and high-interest, short-term loans, the SEC contends.
The SEC’s enforcement action further alleged that: Heller misappropriated more than $185 million of investor funds for his own benefit, including for a beach house and to finance other businesses he owned. He also caused tens of millions more to be paid to fund managers who recruited new investors. Defendants used only a fraction of investor funds to purchase ATMs, and many of the ATMs they purchased were old machines and in disrepair, which they left sitting in warehouses.
The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants and a conduct-based injunction and officer and director bar against Heller.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Heller.
Ponzi Scheme Lawyer David Chase, Esq.
Nationally respected SEC fraud defense attorney David Chase, of the Law Firm of David R. Chase, has successfully represented individuals in SEC investigations around the country for more than 25 years, having previously served as a Senior Counsel in the SEC’s Division of Enforcement in its Miami, Florida Office. If you are under SEC investigation for running a Ponzi Scheme or other securities fraudulent scheme, or just received a SEC Subpoena and need knowledgeable counsel to guide you through the SEC investigation process and protect your legal rights, contact David at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. Visit the Firm’s website to read about David’s SEC defense experience and the firm’s recent successful results for its clients at: www.securitiesfrauddefense.net.
