UPDATE 1-U.S. SEC charges Utah adviser with self-directed IRA fraud
(Adds details throughout, background, dateline)
By Suzanne Barlyn
WASHINGTON, April 30,(Reuters) - U.S. securities regulators have accused a Utah-based retirement plan administrator and its chief executive of defrauding $22 million from investors who owned self-directed retirement accounts.
The U.S. Securities and Exchange Commission said in a civil case on Wednesday that American Pension Services Inc and its chief Curtis DeYoung lost their customers' funds on high-risk investments. According to the SEC, the company fabricated account statements to conceal fraud.
A representative from American Pension Services in Riverton, Utah, did not immediately return a phone call requesting comment. Efforts to locate DeYoung on Wednesday were not successful.
"This misconduct jeopardized retirement security for thousands of APS customers," Karen Martinez, director of the SEC's Salt Lake Regional Office, said in a statement.
A self-directed IRA is a type of retirement account that allows the owner, through a trustee or custodian, to make broader investment choices than those allowed in traditional IRAs or company-sponsored retirement plans. They can, for example, buy real estate, invest in businesses, or hold gold bullion, instead of investing only in mutual funds, stocks or bonds.
The accounts, however, are becoming targets for fraudsters as U.S. investors pour billions of dollars into the accounts, according to securities regulators.
The SEC is especially concerned, "given the lack of regulation in that area," Andrew Ceresney, the SEC's enforcement head, said on Wednesday at the Reuters Financial Regulation Summit in Washington, D.C. Self-directed IRAs are an "area of focus" for the agency, Ceresney said, adding that more enforcement cases were in the works.
The SEC has accused DeYoung of running a scheme that dates back to at least 2005. It has accused him of forging signatures letters, including promissory notes, to invest on behalf of customers in a friend's business that was involved in residential mortgages, loan modifications and debt settlement.
The SEC accused DeYoung of continuing to recommend that his customers invest in the notes, and said he sent their money to his friend until at least 2013, without telling them that his friend had defaulted on the notes.
The SEC said DeYoung concealed the losses by issuing statements that inflated the value of customers' accounts.
The agency's enforcement unit will litigate the case, during which DeYoung will have an opportunity to defend himself.
(Reporting by Suzanne Barlyn in Washington; Additional reporting by Avik Das in Bangalore; Editing by Diane Craft)
- Alabama man gets $1,000 in police settlement, his lawyers get $459,000
- Probe: Athletes took fake classes at University of North Carolina
- Canada's Harper vows tighter security after Parliament attack |
- Some U.S. hospitals weigh withholding care to Ebola patients
- Man arrested after jumping White House fence, causing lockdown