1300 W. Washington Street

Phoenix, AZ 85007-2996

 

 

Main: (602) 542-4242

Email: SecuritiesDiv@azcc.gov

Ask and Check
Before You Invest!

Toll free in AZ

  1-866-VERIFY-9

   (1-866-837-4399)

News_magnifying_glass

in Brief

April is Saving and Investing Month Don’t Get “Fooled” by Fraud, Become an Informed Investor

PHOENIX – The Arizona Corporation Commission´s Securities Division is cautioning investors to learn the red flags of investment fraud and to not get fooled by an investment promoter touting a “safe” investment opportunity void of any volatility and risk of financial loss. 

The Corporation Commission’s Securities Division is responsible for protecting investors from unfair and fraudulent practices in the securities industry, while at the same time promoting an honest and fair securities market in Arizona where individuals and businesses can raise capital and investors can expect a fair return on their investment. “Investor education is a critical component to securities regulation and oversight,” says Chairwoman Marquez Peterson. “The best enforcement is fraud prevention by raising awareness in the investing public before financial losses occur.”

While volumes of investment expertise are now available at the click of a mouse, state securities regulators still remain investors' first line of defense against fraud.  The Commission’s Securities Division investigate complaints, bring enforcement actions, register brokers and educate investors at the grass-roots level. Cryptocurrency scams, real estate investment frauds, promissory note schemes are among some of the problematic investments that can threaten an investor’s life savings.

Investors are most vulnerable to being scammed when they are swept away by the representations of a promoter and are not willing to ask questions and verify the answers. Con artists try to gain an investor’s trust and will have an answer to every objection that is raised. They may even embarrass or intimidate an investor into making a quick decision, using fear and intimidation to cloud a person’s good judgment.

To learn questions to ask that can turn off a swindle, investors should visit the “Ask and Check” section of azcc.gov/azinvestor. Most importantly, the Corporation Commission´s Securities Division urges investors to contact the Investigator on Duty by telephone at 602 542-0662 or by email at SecuritiesDiv@azcc.gov to determine license status and possible disciplinary history of the promoter.

August 7, 2019
Idaho Man and his Company Sold Unregistered Promissory Notes

The Corporation Commission ordered Roland B. Woolsey of Idaho and his affiliated company, Skytrace, Inc., to pay $142,500 in restitution and $10,000 in administrative penalties for offering and selling unregistered promissory notes. Woolsey and Skytrace, Inc. were seeking to raise $10 million in order to market a web-based inventory application but are not registered to offer or sell securities in Arizona.

In settling this matter, the respondents neither admit nor deny the Commission’s findings, but agree to the entry of the consent order. All documents relating to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number S-21055A-18-0309.

July 11, 2019
Commission Finds Phoenix Man Defrauded Hispanic Christians with Promissory Notes

The Corporation Commission ordered Jaime A. Verdugo of Phoenix to pay $381,954 in restitution and a $20,000 administrative penalty for committing securities fraud. The Commission found Mr. Verdugo was not registered to offer or sell securities in Arizona when he solicited multiple promissory note investors, most of whom were from Hispanic Christian communities. The Commission found Jaime A. Verdugo told investors, on behalf of Verdugo Enterprises, LLC, that their money was going to purchase home decor products to fulfill online orders.However, the Commission found Mr. Verdugo mislead investors by stating their money was safe while knowing at least eight prior investors did not receive any investment returns. Also, the Commission found Jaime A. Verdugo failed to inform investors about the company’s unwritten policy to limit payouts to $6,000 every two weeks, which is contrary to the explicit terms of the promissory notes.

All documents relating to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number S-21064A-18-0402.

June 11, 2019
Commissioners sanction Laveen man for unlawful sale of securities

The Corporation Commission ordered Carlton Lamont Fox of Laveen, Arizona, and his affiliated company to pay $15,200 in restitution and a $5,000 administrative penalty for participating in the unlawful offer and sale of unregistered securities while not being registered as an Arizona securities salesman or dealer. The Commission found at least 17 investors were promised a return on their initial investment within 3-6 months, funding either the purchase of leads for prospective businesses that were interested in credit card reader terminals or for the purchase of the terminals that would be subsequently sold to interested businesses. The Commission found that Fox and his affiliated company, Fox First Services, LLC, participated in the unlawful sale of securities as an unregistered salesperson or dealer. Further, the Commission found that none of the investors received a full return of their original investment, and that Fox used some of the money to pay telemarketers for their work in soliciting investor funds. In settling this matter, respondents neither admitted nor denied the Commission findings, but agreed to the entry of the Commission's consent order.

All documents relating to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number S-21059A-18-0345.

June 11, 2019
Commissioners order more than $2 million in restitution to restore investors

Arizona resident Adam W. Child agreed to pay $2,014,592 in restitution and a $25,000 administrative penalty for selling promissory notes and LLC membership interests to investors. The Corporation Commission found that Child offered and sold notes and membership interests to at least 17 investors of Titan Funding Group I, LLC and Titan Capital Real Estate Fund I, LLC. The Commission found the investor funds were pooled to lend money to real estate developers who were to purchase and "flip" residential properties. However, the Commission found that Mr. Child violated the Securities Act's antifraud provisions when he failed to disclose to investors a previous judgment against him, that he had declared bankruptcy and that his prior mortgage-lending business had its license revoked.

In settling this matter, the respondent agreed to the entry of the consent order and admitted to the Commission's findings only for purposes of the administrative proceeding. All documents relating to this agenda item can be found in the Corporation Commission's online docket at https://edocket.azcc.gov and entering docket number S-21054A-18-0301.

May 15, 2019 
Densco Investment Corporation Investors to Receive Additional Restitution 

Last week, investors of DenSco Investment Corporation were awarded a second monetary distribution for losses incurred as a result of their investment in a fraudulent company. On May 10, 2018, Maricopa County Superior Court approved the receiver’s motion to provide a second distribution in the amount of $2.5 million to DenSco Investment Corporation investors. This comes on the heels of a decision by the court in December 2017 where the receiver’s first motion was approved and $4.5 million was distributed to investors.

DenSco Investment Corporation was a real estate investment firm based in Chandler, Arizona that ceased doing business in 2016. The company was obtaining loans against hundreds of properties that were never actually purchased. As a result of this fraud, action was brought against the company by the Arizona Corporation Commission for violations of the Arizona Securities Act. Due to the death of the sole owner of the corporation, a receiver was appointed by the court in 2016. A receiver is a person appointed by the court to take possession and charge of designated assets or property and to administer them in accordance with court directives.

To date, DenSco Investment Corporation investors have been awarded roughly $7 million in distributions approved by the court. The receiver continues to recover assets and claims on behalf of the receivership and believes that more funds will be available for distribution at a later date.

                                                                     

 

Arizona Corporation Commission

1200 W. Washington Street

Phoenix, AZ 85007

 

Corporations Division

1300 W. Washington Street

Phoenix, AZ 85007

 

Tucson Office (Walk-ins only)

400 W. Congress Street

Tucson, AZ 85701