U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21754 / November 23, 2010
United States Securities Exchange Commission v. Richard Dalton and Universal Consulting Resources LLC, Defendants, and Marie Dalton, Relief Defendant, Civil Action No. 10-CV-02794-JLK-KLM (D. Colo.) (November 16, 2010).
SEC CHARGES OPERATOR OF DIAMOND THEMED PONZI SCHEME
On November 22, 2010, the United States District Court for the District of Colorado issued an emergency court order freezing the assets of defendants Richard Dalton and Universal Consulting Resources LLC (UCR), and relief defendant Marie Dalton, in connection with a Ponzi scheme. The court also ordered that the defendants repatriate all funds or assets to the United States and prepare a sworn accounting describing the receipt and disbursement of all investor funds.
The Commission alleges that from about March 2007 through about June 2010, the Ponzi scheme raised approximately $17 million from 130 investors in 13 states. Dalton and his company, UCR, solicited investors for two fraudulent offerings that were generally referred to as the “Trading Program” and the “Diamond Program” and promised returns of between 60% to 120% per year. The Commission alleges that investors in both programs received monthly payments which Dalton told them were profits from successful trading. However, the majority of funds that came into UCR bank accounts were from new investors, not from any actual profit-generating activity. The complaint alleges that Dalton, who had no other employment or legitimate source of income, funded his personal life at the expense of investors and also transferred more than $900,000 in order to purchase a home in the name of his wife.
According to the complaint, Dalton told investors in the Trading Program that their money would be held safely in an escrow account at a bank in the United States, and that a European trader would use the value of that account, but not the actual funds, to obtain leveraged funds to purchase and sell bank notes. According to Dalton, the trading was profitable enough that he was able to guarantee returns of four to five percent per month – or 48 to 60% per year – to investors. Dalton claimed that he had successfully run the Trading Program for nine years.
The Commission alleges that in early 2009, UCR began offering the Diamond Program, which Dalton claimed would profit by using investor funds for diamond trading. Similar to the Trading Program, Dalton claimed that investor funds would be safely held in an escrow account. Under the Diamond program, Dalton enticed investors with a guaranteed ten percent monthly return – or 120% yearly return.
The SEC's complaint alleges that Dalton and UCR violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint also names Marie Dalton as a relief defendant in order to recover investor assets now in her possession. The SEC will also seek permanent injunctions, disgorgement plus pre-judgment interest, and financial penalties against Dalton and UCR, and disgorgement from Marie Dalton.
See Also: SEC Complaint