SEC Halts Ongoing Fraud in Minnesota
FOR IMMEDIATE RELEASE
Washington D.C., Sept. 2, 2015—
The Securities and Exchange Commission today announced fraud charges and an emergency order to halt a Minnesota resident and his company from continuing to raise money from investors under false pretenses while failing to produce the promised returns.
The SEC alleges that James M. Louks of Owatonna, Minn., and FiberPoP Solutions Inc. have defrauded nearly 100 investors by convincing them to invest in notes that would theoretically help fund the company’s operations. FiberPoP was founded in 2003 to build and operate fiber optic networks and data centers, but still has no operations or employees. Louks and FiberPoP promised massive returns on the investments – as much as 100 percent – within a very short period of time. Typically the investments they have been peddling bear the hallmarks of prime bank schemes, which tout secrecy and involve exaggerated returns in supposedly complex financial instruments that turn out to be fictitious.
According to the SEC’s complaint filed in federal court in Minneapolis, Louks has continued to solicit investors while knowing that none of the purported financing opportunities offered by FiberPoP during a 12-year period ever produced funding for the company or returns for investors. The complaint was filed on September 1, and the court issued an order today barring Louks and FiberPoP raising more investor funds while the SEC’s case is ongoing. Louks and FiberPoP agreed to the order without admitting or denying the SEC’s allegations.
“We allege that Louks lured investors into illusory investment opportunities under the guise of secrecy with promises of massive short-term profits. Meanwhile he was repeatedly losing investor money in virtually identical investments,” said Robert J. Burson, Associate Regional Director of the Chicago Regional Office.
The SEC’s complaint charges Louks and FiberPoP with violations of Section 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The SEC’s continuing investigation is being conducted by Charles J. Kerstetter, Ariella O. Guardi, and Scott J. Hlavacek. The SEC’s litigation will be led by Mr. Kerstetter and Ms. Guardi.
The SEC and other regulators have warned investors about the dangers of prime bank schemes and provided tips about how to detect and avoid them. More information is available at www.investor.gov.