U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20552 / May 2, 2008
Securities and Exchange Commission v. Safevest, LLC, et al., United States District Court for the Central District of California, Civil Action No. SACV-08-473 JVS (MLGx)
SEC Halts Multimillion Dollar Fraud by Orange County CompanyThe Securities and Exchange Commission yesterday obtained a court order halting a $25 million fraudulent scheme perpetrated by an Orange County company. The SEC sued Laguna Hills, Calif.-based Safevest, LLC and its principals, Jon G. Ervin, Sr., age 61 and a resident of Mission Viejo, Calif., and John V. Slye, age 68 and a resident of Arlington, Va., for allegedly running a Ponzi-like scheme and misappropriating investor funds. The Honorable James V. Selna, United States District Court Judge for the Central District of California, issued an order freezing assets and appointing a temporary receiver over Safevest and its affiliates.
The SEC's complaint, filed in federal court in Santa Ana, Calif., alleges that since at least May 2007, the defendants have raised at least $25 million from more than 500 investors, including many from the Christian community, misrepresenting that investor funds would be pooled and invested in futures commodities trading, that the investment would generate daily profits ranging from 1.5% to 1.9%, and that investors could receive their money back within 72 hours of requesting it. In reality, according to the complaint, no investor money was invested in futures trading, and requests by investors for withdrawal of their funds have either not been honored or have only been partially honored. The complaint further alleges that, undisclosed to investors, the defendants paid more than $18 million to investors in Ponzi-like fashion. The defendants also allegedly misappropriated investor funds for the personal use of Ervin, Slye, and their family members.
In its lawsuit, the SEC obtained an order (1) freezing the assets of Ervin and Slye; (2) freezing the assets of, and appointing a temporary receiver over, Safevest and its affiliates; (3) preventing the destruction of documents; and (4) temporarily enjoining Safevest, Ervin, and Slye from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also seeks preliminary and permanent injunctions, disgorgement, and civil penalties against all defendants. A hearing on whether a preliminary injunction should be issued against the defendants and whether a permanent receiver should be appointed is scheduled for May 12, 2008 at 1:30 p.m.
The Commodity Futures Trading Commission also filed an emergency action yesterday against Safevest, Ervin, and Slye alleging violations of the antifraud and registration provisions of the Commodity Exchange Act, and the California Department of Corporations today issued a desist and refrain order to Safevest and Ervin. The U.S. Attorney's Office for the Central District of California also filed a criminal complaint against Ervin yesterday, and the Federal Bureau of Investigation arrested him today.
The SEC acknowledges the assistance of the Commodity Futures Trading Commission, the U.S. Attorney's Office for the Central District of California, the Federal Bureau of Investigation, and the California Department of Corporations.