In the last two days the SEC has filed two new cases against two more Utah-based companies and individuals who are alleged to have engaged in Ponzi Schemes.
On March 23, 2011, it filed a complaint against Mike Watson Capital, LLC, a company based in Provo, Utah. The SEC also named Michael P. Watson, a resident of Mapleton, Utah, and Joshua F. Escobedo, a resident of Spanish Fork, Utah as defendants. According to its press release the SEC has alleged that Watson and Escobedo “raised more than $27.5 million from more than 120 investors through Mike Watson Capital’s issuance of promissory notes… Watson and Escobedo told investors that returns were generated by real estate investments, and backed by substantial equity and cash flow produced by company properties. In reality, the properties never generated sufficient income to cover investment interest or redemptions, and therefore investor returns were paid primarily from new investors’ funds.” The SEC alleged that the company owes more than $19 million in unpaid principal and interest on its promissory notes to investors, its real estate portfolio has tanked, and commercial banks have foreclosed on at least nine properties. This one looks pretty grim for the people who initially invested $27 million of their hard-earned money with these two Utah County guys – and for those of you who received part of the $9 million they paid back to investors, you may find yourselves named in a clawback lawsuit. Yes, everyone is a loser in these cases. Interestingly, the Washington State Department of Financial Institutions brought charges against these same guys nearly a year ago.
In yet another case filed yesterday in the United States District Court here in Utah, the SEC sued Scott Clark, and two businesses he ran called Impact Cash and Impact Payment Systems. The SEC complaint alleges that between 2006 and 2010 Clark raised more than $47 million from over one hundred investors. Some of the investors believed they were buying stock in the company itself, but the majority of the victims were told that their capital would be used to fund the loans. Clark told investors that his companies generated revenues of at least 80% per year. The SEC alleges that Clark used investor funds to buy three Mercedes Benzes, a restored 1963 Corvette, a $25,000 home theater system, expensive furniture, bronze statuary and snowmobiles. It is unclear whether the investors will be able to recover some or all of their investments; this is the type of case where a Receiver is often put into place. The only thing that is unique about this Impact Cash case is that Mr. Clark and his companies were all based in Logan, as opposed to Utah County where most of these schemes seem to occur. The Salt Lake Tribune story about this case can be found here, and as usual the reader comments are entertaining.
The total investment in these two schemes, much of which came from the good citizens of the State of Utah, was $74 million.
© 2011 Mark W. Pugsley, all rights reserved.
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Maybe you should do some investigating before you publish on the web. You have posted SEC facts that are in some cases INCORRECT. You have implicated innocent people who were victims. as a result, you are ruining the lives of these innocent victims. Lies and distored facts that come from the SEC destroy lives. When the SEC drops the cases they have perused because they indeed find they had no merit, never get corrected and destroy the lives of those they have implicated. One such individuals name still remains on these documents and the accusations were INDEED FALSE. His name only appeared on these documents because of misinformation given to the SEC by individuals who had no fist hand knowledge. All of which was hear-say and rumors. His case has since been dismissed by the SEC but still remains on these old documents. When this man was dropped from the SEC’s civil suit, he asked them how he was ever going to establish his good name and reputation due to the damage they had done, their response was “we can’t do anything about the damage that has been done.” Before you destroy a man’s good name, maybe you should do some research of your own to make sure you’re not spreading lies as the SEC did, due to false information.
Thank you for your comment. For a variety of reasons I only post stories that have been published in SEC websites or otherwise reported in the news. I always link to the sources for these stories, but in doing so I do not endorse them or mean to imply that the allegations are correct. I do not take responsibility for the accuracy of allegations made by the SEC or news reporters.
In fact, as an attorney who practices in this area and often defends these cases I am well aware that allegations by the government are often proven to be incorrect in court. If I become aware of such allegations being formally disproven in court and can verify that from court filings I will certainly update my posts to reflect that information. Moreover, in many cases people have commented on posts and provided their side of the story, and I have always posted those responses.
The purpose of this website is NOT to imply that stories written by newspaper reporters or allegations made by government regulators like the SEC or Utah Attorney General’s officer are necessarily correct. Rather, the purpose of this website is to track the cases filed in Utah and to educate people about what to watch out for. Investment fraud is a very real and troubling problem here in Utah and I believe people need to be educated about how to avoid getting caught up in it.
Hello, Just wondering if you have an update on Mike Watson? I haven’t been able to find anything on him and was just curious if the charges were dropped or if he was charged. Any information you have on that case would be greatly appreciated. Thanks
I have personal knowledge about Watson Capital and hopefully they will be prosecuted to the full extent of the law. They have gotten away with far more than most folks who have committed similar crimes.
I worked for Mike Watson at his new venture deal dragon. He is a fraud. He is very good about talking people out of their money with no intention of giving them anything in return. If you have been victim to Mike Watson you can contact him at his new fraud. It’s just deal dragon with a new name customervaluepackage.com. Please use this website on whois.com to get his personal email.