Today the Salt Lake City office of the Securities and Exchange Commission filed a lawsuit against Raymond P. Morris, E&R Holdings, LLC, Wise Financial Holdings, LLC, Momentum Leasing, LLC, James L. Haley, Cornerstone Capital Fund, LLC, Vantage Point Capital, LLC, Jay J. Linford, Freedom group, LLC, and Luc D. Nguyen (an attorney). The suit alleges that the named individuals ran a Ponzi scheme that bilked scores of investors out of “no less than $60 million.”
The complaint alleges that from March 2007 through January 2009, Raymond Morris offered and sold unregistered promissory notes to investors. In the course of soliciting these loans the SEC alleges that he and the other defendants made misrepresentations to investors to convince them that they were purchasing high yield notes that were risk free. Morris allegedly told investors that their funds would be deposited into a secure account and would be used only to verify deposits.
However, instead of using the funds as represented Morris allegedly used investor funds “for personal expenses, including a luxurious home and several sports cars, and for making Ponzi payments to create an illusion of a successful investment.”
The Pitch
According to the SEC’s Complaint, Morris told investors he was raising capital for an “exclusive investment fund” based on a “capital leasing concept.” Morris advised investors that their principal would be deposited into a secure account that he had sole control over and that investment funds would never leave the account because they would only be used for “verification of deposit” purposes by certain private traders. Morris further told investors these private traders
would obtain large lines of credit and invest the proceeds in ways that would generate a very high monthly interest rate.
No Risk?
The complaint states that these defendants repeatedly represented that the investment was risk-free. They said they money was never at risk:
- Paragraph 41: Linford fraudulently raised about $1 million for the Fund by misrepresenting that the Fund paid returns as high as 100% in seven days with no risk to investor principal.
- Paragraph 47: Morris orally assured investors that their investment was free of risk
- Paragraph 60: Haley also falsely advised investors that their investment carried no risk and that the high returns were guaranteed.
- Paragraph 75: Nguyen represented to investors that their principal would be safe and essentially risk-free.
My comment: Just because someone tells you there is no risk does not mean that its true. Investors should verify this is the case. Among other things you can ask for trading records and/or bank accounts. Get a list of investors and talk to other investors. Check litigation history for all of those involved and look for prior bankruptcies. Call the bank to verify deposits. Call the SEC and the Utah Division of Securities to ensure the issuers are licensed and haven’t been the subject of an enforcement action. Do your research.
The returns they promised were outrageously high
Here is what the complaint alleges about the returns investors were promised:
- Paragraph 26: Morris said the Fund was started by the owner of the Houston Astros and had generated 20% returns per month for about eight years.
- Paragraph 41: Linford fraudulently raised about $1 million for the Fund by misrepresenting that the Fund paid returns as high as 100% in seven days with no risk to investor principal.
- Paragraph 45: Morris further advised investors that high returns of 20% per month or more would be generated by allowing private traders to verify the deposited funds and obtain lines of credit to invest in various ways.
- Paragraph 60: Haley told his investors that returns of 12-20% per month would be generated by allowing private traders to use the funds to obtain lines of credit and invest the proceeds.
My comment: They promised returns as high as “100% in seven days with no risk to investor principal”? Wow. If it sounds too good to be true, it probably is.
The moral of the story
I have no personal knowledge of the events that are the subject of this lawsuit, and do not currently represent anyone in this case, but these facts are similar to many others I have been involved with. As is often the case, many of the investors who lost money in the Fund were inexperienced, unsophisticated and had few assets. And yet they were lured by promises of high returns with no risk to invest what little money they had (and some cases money they didn’t have) in Morris’s Fund. Now the money is gone.
It pains me to learn that many of the investors may have been persuaded to invest because of representations from a lawyer who claimed to be an “SEC Attorney.” I do not know Mr. Luc Nguyen but if the allegations in the complaint are true it is very troubling for him and for our profession. According to the records of the Utah State Bar Mr. Nguyen is indeed a licensed attorney in Utah.
The SEC has alleged that Nguyen “told investors that the Fund was ‘one of the best he had ever seen.’ Nguyen also falsely told investors that he had done extensive due diligence [and that] he had personally met with the attorneys representing the supposed trading companies involved in the Fund and that he had received copies of all operating agreements between the leasing companies and the trading companies.” Unfortunately these statements were apparently false.
Here is a link to the SEC Complaint.
what about the minister and school principal in layton who duped chuirch members and friends out of millions to give to ray morris to invest. they should be charged the samers as the ones listed in the lawsuit. they abused their church members the same as morris
i agree pastor and john huffman should have never led us down that path, they abused us church members worse because they r suppose to protect us
yes i agree the two from the layton church should be held accountable they abused the church members worse than the others cuz they were suppose to protect the church members and not take them down that path i just pray that all the church members who lost money because of these two will come forward so they can be punished like the rest of the scammers
The Pastor and Mr. Huffman were duped in the same way we all were with this investment. You two idiots really need to worry about the telephone pole in your own eyes instead of the tooth pick in someone elses eye. Let him that is without no sin cast the first stone. Poor little you’s!!! Wow, what idiots!
TIM
No, I am not the idiot! I saw Ray exactly for who he was, you were the stupid idiot, giving him your money. Pastor (should b Xpastor) and John Huffman made very good money for taking everyone’s money, John Huffman had how many investors under him???,
way too many!!! That man was collecting a very FAT bank deposit every month, thanks to all his church members. And, what a slap in the face to the pastor, with X shacking up with Ray, with best friends like that who needs enemies??? Hopefully when Ray goes down people will come forward and go after John Huffman, good night stupid idiot!!! oh by the way get the pole out of your eyes and stop your preaching because I don’t understand your mumbling!!!
Did Pastor Beikel say he had been duped? I never heard that. Why then as the head of the church did he never preach or teach how it happened and then how to avoid it in the future? Especially becuase of the fact that Ray went for the head, the entire staff, then you have the body. That aside how can he say he was duped into getting a kickback for every member, evangelist or missionary he got involved? That was pure selfish greed towards those he commited to lead in righteousness. What about the comment he made at the first meeting when IT colapsed: that the SEC was only going after Ray to get a cut of the action. That was nothing but ingnorance.
He was totally lied to from the beginning and received zero kick backs.
What makes these things even worse are the lies being told after the fact that just increase the hurt and damage to already hurtin people.
Really???? because the original SEC paperwork that Ray got said that C. B. (I wonder who that is?????) was getting 20 percent off all monies he brought in. There is plenty of paperwork to prove all of this!!!!!!
It is very wsad that Pastor Chuck Beickel and John Huffman had to get the church and it’s members involved it this whole mess. And what a mess it was and still is. They need to get rid of Pastor Beickel- and John Huffman- they both led some of the church flock to alot of heartache and some had to lose thier houses, cars and file bankruptcy. It is VERY VERY SAD. The members of Faith Baptist Church is Layton UT where taken by all three of these men- Pastor Beickel , John Huffman and Raymond Morris.
Pastor Beickel according the the by laws of the church that were in the place at the time- was suppose to step down- SO why hasn’t he??? Oh I know , the by laws fo the church are made to adjust according to what ever suits the situation at that time.
Oh I get it now all you holy people – EVERYONE needs to pay BUT Pastor Chuck Beickel and John Hufrfman- RIGHT. Don’t you peole listen to the preaching from either of these men?
Faith Baptist Church won’t not have lost alot of it’s members like it did .
Pastor Chuck Beickel and high and mighty John Huffman are above everything – SHAME SHAME. – BOTH of you and your family need to move- far away – and let Pastor Rod Hall take over the church – at least he can be trusted.
By the way Pastor Rod Hall had to file bankruptcy because he lost so much in this ponzi scheme BUT WHY DIDN”T PASTOR BEICKEL OR JOHN HUFFMAN? Why not them?
Pastor Beickel and John Huffman NEVER lost their homes or vechiles – WHY NOT??????
Matter a fact Pastor just bought a new home. !!!!! –
No way these two scams were duped, they were getting 20 percent of each investor they brought in, and of course they didn’t lose anything, they knew exactly what they were doing and now John and Karen running away?, aren’t they also in the process of selling some land in Layton????? John and Karen made off like bandits while everyone else is still paying the price, all I can say, these people are no christians, they are ugly greedy human beings and thank god I saw thur them, Pastor and John, such fakes with their ugly beedy eyes. I say everyone who lost should go after Pastor Beickel, John and Karen Huffman, they may run but they can’t hide just Ray and Pastors X. And Pastor, if you should read this, be a man and do us all a favor and step down you are a disgrace!!!!!!
~ATTENTION~
THERE HAS NEVER BEEN A FORMAL CHARGE MADE AGAINST ANY OF THESE MEN.
THIS IS A BLATANT LIE AND SLANDER IS A CRIME. you have got your facts completely wrong and are committing slander against all of these men with the exception of RAY MORRIS. Ray Morris is the only one named here that is still under investigation by the SEC, NONE of the other men have been CHARGED WITH ANY WRONG DOING, and ARE NOT UNDER INVESTIGATION BY ANY GOVERNMENT AGENCY…DO YOUR HOMEWORK AND GET YOUR FACTS RIGHT BEFORE YOU FALSELY ACCUSE.. These men were victims of Ray Morris he is the only criminal here and you are defaming and destroying these men’s good names..
You are no better than Ray Morris. It is a matter of public record. Do your homework before you make FALSE ACCUSATIONS. ALL CIVIL ACTION HAS BEEN DISMISSED AGAINST ALL OF THESE INNOCENT MEN WITH THE EXCEPTION OF RAY MORRIS. This is a matter of public record. You should be ashamed of yourself for spreading lies on a public forum, and will be held accountable for doing so. I would recommend taking this post down and doing the research that will back up my claims and debunk your slanderous lies. SLANDER IS A CRIME!
In response to this comment, let me say unequivocally that I was reporting on the allegations in the complaint that was filed against these individuals by the Securities and Exchange Commission on January 11, 2011. I was clear that these were allegations, not proven facts. This lawsuit is a matter of public record, I do not make this up. The original article linked to the SEC Complaint, and here is that link again: SEC Complaint. In addition, here is a link to the SEC’s website where they discuss the new lawsuit: SEC Press Release. Subsequent settlements resulting in dismissal of the civil actions do NOT mean that the lawsuit was not filed as I reported, or that the allegations were not correct. It also does not mean that the statements I made about the original filing of the case were libelous or slander.
I have reviewed the docket from the SEC’s federal lawsuit, Case No. USDC 2:11-CV-00021 BSJ, and it appears that all of the defendants have settled with the SEC, or have had default judgments entered against them. The court has entered orders containing these settlements, and those orders are also a matter of public record. Here are summaries of the various conclusions as to each defendant:
Raymond Morris – permanent injunctions, disgorgement of over $65 million in profits plus interest, and a civil penalty of $150,000.
E&R Holdings, LLC, Wise Financial Holdings, LLC, and Momentum Leasing, LLC – permanent injunctions, disgorgement of over $65 million in profits plus interest, and a civil penalty of $650,000 against each entity.
James L. Haley – permanent injunctions, no civil penalties were imposed due to an inability to pay, collateral bar from the securities industry.
Cornerstone Capital Fund, LLC, Vantage Point Capital, LLC – the SEC obtained a judgment by default and imposed permanent injunctions.
Jay J. Linford – permanent injunctions, disgorgement of $388,000 plus interest for a total of $482,939, no civil penalties were imposed due to an inability to pay.
Freedom group, LLC – permanent injunctions, disgorgement of $8,779,096 plus interest for a total of $10,956,163, and a civil penalty of $650,000.
Luc D. Nguyen – permanent injunctions, disgorgement of $391,000 plus interest for a total of $450,146, no civil penalties were imposed due to an inability to pay.