American Growth Funding and it’s owner, Ralph Johnson, was charged with fraud after Johnson allegedly lied to investors who purchased high-yield securities, according a complaint filed by the U.S. Securities and Exchange Commission.
[Read the full complaint here.]
SEC alleged that Johnson falsely claimed that the company’s finances were being audited each year, as well as inflating the amount of return the investors would see on the investment. The company was not audited until 2014.
More from 24/7 Wall St:
American Growth Funding, which raises capital from investors to provide loans to businesses, also made misrepresentations in offering documents about its management and concealed details about deteriorating loan values that could imperil full payment of the promised returns to investors.
Andrew M. Calamari, director of the SEC’s New York Regional Office, commented:
We allege that AGF II misled investors and overstated the true value of these investments, which are worth far less than presented because many of the company’s loans are non-performing. We further allege that Allen and Wasserman looked the other way and allowed PAA to facilitate the fraud as the placement agent.
An unnamed brokerage firm was also charged as a part of the fraud.
Photo by arsheffield via Flickr CC License
