SEC Charges Five Arizona Residents With Stealing Millions From Investors to Fund Travel and Entertainment Sprees
The Securities and Exchange Commission today charged five Arizona residents with stealing millions of dollars from investors to make car payments, buy clothes, and fund travel and entertainment at luxury resorts, casinos, and strip clubs.
The SEC alleges that Jason Mogler, James Hinkeldey, Casimer Polanchek, Brian Buckley, and James Stevens misappropriated roughly 97 percent of the $18 million they raised from 225 investors who were told the funds would be used to acquire and develop beachfront property in Mexico as well as to operate recycling facilities and purchase foreclosed residential properties for resale. They repeatedly lied about the purported progress of the investments to calm worried investors as time extended past when their promissory notes should have been repaid. In certain instances they made Ponzi-like payments to investors who were threatening them with lawsuits by using money from new investors, which Mogler termed “robbing Peter to pay Paul.”
“We allege that while these men were living the high life, they outright lied to investors about the uses of their funds and misled them about the safety and security of the investments and the rates and timing of their returns. Despite telling investors they were purchasing promissory notes from licensed brokers, none of these men were registered with the SEC to solicit investments,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.
According to the SEC’s complaint filed in U.S. District Court for the District of Arizona:
- The five men solicited and lured prospective investors through radio, magazine, and Internet ads as well as marketing materials, cold calls, and investor presentations.
- Polanchek in particular was known to solicit potential investors at such venues as bars, cruises, and self-help seminars.
- The men also participated in an Arizona radio program called The Investment Roadshow during which they instructed listeners about how to use self-directed IRAs to invest in their companies.
- They steered listeners and other prospective investors to an Arizona Investment Center website they created for investors to schedule appointments or sign up for seminars or webinars to learn more about their investment opportunities.
- Mogler was described as the “Master Investor” on the Arizona Investment Center website and he orchestrated and perpetuated the fraudulent offerings. He stole almost $10 million in investor funds for strip club outings, vacations to Hawaii and Disneyland, and such personal expenses as mortgage payments and child support.
- Polanchek stole approximately $2 million, Hinkeldey stole $900,000, Buckley stole $500,000, and Stevens stole $200,000.
- Mogler candidly called investor funds “our treasure chest” and his “personal (expletive) candy store.”
The SEC’s complaint charges Mogler, Hinkeldey, Polanchek, Buckley, and Stevens with violating federal antifraud laws and related SEC rules. The SEC seeks disgorgement of ill-gotten gains plus prejudgment interest and penalties as well as permanent injunctive relief.
The SEC’s investigation has been conducted by Wendy E. Pearson, Christopher M. Conte, and Finola H. Manvelian of the Los Angeles office. The SEC’s litigation will be led by Gary Y. Leung. The SEC appreciates the assistance of the Arizona Corporation Commission and the Wisconsin Department of Financial Institutions.