U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22982 / April 30, 2014
Securities and Exchange Commission v. American Pension Services, Inc. and Curtis DeYoung, Civil Action No. 2:14-cv-00309 (USDC Utah, Filed April 24, 2014)
SEC Charges Utah-Based Retirement Plan Administrator with Defrauding Investors
The Securities and Exchange Commission obtained an asset freeze and the appointment of a receiver against a Utah-based retirement plan administrator that defrauded investors in self-directed Individual Retirement Accounts (IRAs), causing them to lose millions of dollars of savings.
The SEC's complaint, filed in U.S. District Court in the Central Division of Utah, charged American Pension Services, Inc. (APS), and the firm's founder, president and chief executive officer, Curtis L. DeYoung, both of Riverton, Utah. According to the SEC's complaint, DeYoung squandered more than $22 million of investor funds on high-risk investments and hid the losses by issuing inflated account statements, allowing him to continue collecting fees and further victimizing his customers.
According to the SEC's complaint, DeYoung's fraud scheme dates back to at least 2005 and targeted customers with retirement accounts holding non-traditional assets typically not available through traditional 401(k) retirement plans or other IRA custodians, the SEC alleged in its complaint. Although APS has no authority to direct customer trades, DeYoung allegedly used forged letters and signatures to invest on behalf of customers, including in promissory notes issued by a friend whose businesses never turned a profit. DeYoung continued to recommend that APS customers invest in the notes and to send customer funds to the friend until at least April 2013 and never disclosed that the friend had defaulted on the notes in 2010 and that DeYoung had forgiven the debt.
The Commission alleges that by engaging in this conduct APS and DeYoung violated Sections 17(a)(1) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a permanent injunction as well as disgorgement, prejudgment interest and a civil penalty from APS and DeYoung.