SEC Halts IRA Scam That Cost Investors $22 Million

Although APS has no authority to direct customer trades, DeYoung allegedly used forged letters and signatures to invest on behalf of customers, including in promissory notes issued by a friend whose businesses never turned a profit. “DeYoung continued to recommend that APS customers invest in the notes, and he sent customer funds to the friend until at least April 2013 without disclosing to investors that the friend had defaulted on the notes in 2010 and DeYoung had forgiven the debt,” the complaint says.

The SEC further alleges that investments in other bankrupt ventures, including an office building in Wichita, Kansas, caused APS customers to lose more money. “APS concealed those losses and issued account statements that inflated the value of customer holdings, allowing APS to levy fees based on the full value of the holdings even when they were worthless,” the SEC states.

According to the SEC’s complaint, when DeYoung was questioned by the SEC about a $22 million gap between actual holdings and those showing on account statements, he invoked his Fifth Amendment privilege against self-incrimination and refused to answer.

Judge Robert J. Shelby granted the SEC’s request for a temporary restraining order to freeze the assets of APS and DeYoung. The court appointed Diane Thompson of Ballard Spahr LLP as the receiver in the case to recover investor assets.