The Securities and Exchange Commission (“SEC”) announced fraud charges against American Pension Services Inc. (“APS”), a Utah-based retirement plan administrator, and its founder, president and CEO Curtis L. DeYoung. According to the SEC Complaint, APS and DeYoung defrauded investors by investing their savings in high risk investments, causing them to lose more than $22 million of their savings.
According to the SEC’s Complaint, DeYoung began his fraudulent scheme in or around 2005. The investors he targeted had self-directed retirement accounts holding non-traditional assets, unlike bonds and stocks. In the Complaint, the SEC alleges that DeYoung used forged letters and signatures to invest on behalf of customers in order to direct customer trades. In particular, according to SEC, he invested his customer’s funds in promissory notes issued by a friend of his. DeYoung continued to recommend that APS customers invest in the promissory notes through 2013, without disclosing to investors that the friend had defaulted on the promissory notes in 2010 and DeYoung had forgiven the debt. Pursuant to the SEC Complaint, DeYoung purportedly gave the friend money to make fake interest or principal payments to the clients.
DeYoung’s fraudulent schemes did not end there. The SEC also alleges that DeYoung made investments in other bankrupt business ventures, including an office building in Wichita, Kansas. According to the SEC’s Complaint, APS and DeYoung concealed the losses in the bankrupted business ventures and issued customer account statements that inflated the value of the customer’s holdings. The SEC states, “The investments in these entities continued to be held at their full investment value long after they became worthless or significantly reduced in value.” According to the SEC, APS’s clients received inflated customer account statements at the end of 2012 and in 2013. Allegedly, investors were told that there was $45.9 million in the master trust accounts at the end of 2012, when in reality the account balance totaled $23.8 million, reflecting a shortfall of approximately 50%. The SEC claims that the shortfall widened even more in 2013, when the account statements reflected a balance of $57.3 million in their master trust accounts, and the shortfall at that time was $22.7 million.
Karen L. Martinez, director of the SEC’s Salt Lake Regional Office, stated, “This misconduct jeopardized retirement security for thousands of APS customers.”
According to the SEC’s complaint, DeYoung invoked his Fifth Amendment privilege against self-incrimination and refused to answers any questions about the $22 million shortfall to the SEC. The Honorable Robert J. Shelby, district judge in the United States District Court for the District of Utah, granted the SEC’s request for a temporary restraining order to freeze the assets of APS and DeYoung.
APS’s website touts that its client relationships “starts with trust” and the trust is “the thread that weaves thorough every American Pension’s relationships.” Unfortunately, for all the investors who were defrauded by APS and DeYoung, that trust was betrayed, and now they are left with the reality that their retirement savings are gone.
Lax & Neville LLP has extensive experience in successfully prosecuting claims on behalf of customers who have been defrauded and have suffered investment losses. Please contact our team of attorneys for a consultation at (212) 696-1999.