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AOB Commerce Ponzi

From the SEC Press Release on the AOB Commerce Ponzi:

The Securities and Exchange Commission today filed a civil injunctive action against Darryl Lamonth Clark in the Northern District of California for his participation in a fraudulent ponzi-like scheme perpetrated by Terchi "Nelson" Liao and two entities Liao controlled, AOB Commerce, Inc. and AOB Asia Fund I, LLC (collectively, "AOB").

The SEC alleges that AOB and several related entities raised more than $45 million from hundreds of investors in several states from mid-2004 to July 2007, through the unregistered offering and sale of promissory notes that in many cases paid interest of up to 5.5% per month.

The SEC's complaint alleges that, although AOB purported to be in the business of making loans to companies in Asia, investor proceeds were used primarily to pay principal and interest on the notes, pay commissions to sales agents, and make undisclosed loans to entities affiliated with AOB.

The Commission brought the scheme to a halt in July 2007, with the filing of an emergency action and the appointment of a receiver. [SEC v. AOB Commerce, Inc., et al., Civil Action No. CV-07-4507 CAS (JCx) (C.D. Cal. filed July 12, 2007)].

The SEC alleges that Clark became an AOB sales agent in July 2004, and that he managed AOB's San Jose, California branch office.

The SEC further alleges that Clark failed to conduct adequate due diligence, helped create a misleading brochure given to investors, and failed to register or become associated with a registered broker-dealer at the time that he participated in the sale of notes.

The SEC also alleges that Clark received payments totaling at least $800,000 from AOB during this time period.

If you want me to follow this case, drop me an email and I will put up the Court documents.

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Full post as published by Misleading Advertising Law on July 27, 2009 (boomark / email).