U.S. regulators have charged a Houston man in federal court with conducting a US$114 million Ponzi scheme that saw investors funds disappear into a now-bankrupt Montreal-based company.
Without admitting or denying the allegations, Frederick Allan Voight and a firm he owns, Daystar Funding LP, agreed to settle the SEC’s complaint by consenting to permanent injunctions, which prevent the two from committing these violations in the future. They also agreed to asset freezes and other emergency relief, and to pay civil penalties and return allegedly ill-gotten gains with interest in amounts to be set later by.
The U.S. Securities and Exchange Commission (SEC) charged Voight with defrauding more than 300 investors in multiple offerings of promissory notes issued by two partnerships he owns, F.A. Voight & Associates LP and DayStar. While some of the funds went to repay earlier investors, approximately US$22 million of money collected remain unaccounted for, the SEC says.
According to the SEC’s complaint, Voight recently raised US$13.8 million that he said would be loaned to a tech startup named InterCore Inc. to fund research into technology to prevent accidents caused by drowsy driving. The SEC alleges that Voight used funds from investors to make Ponzi payments to earlier investors, or funnelled them to InterCore. The SEC alleges that the company, in turn, sent the funds to its Montreal-based subsidiary, InterCore Research Canada, Inc., “where the funds seemingly disappeared.”
InterCore Canada Research is a wholly owned subsidiary of InterCore, which filed for bankruptcy in April.
The SEC’s complaint charges Voight and DayStar with securities fraud and conducting unregistered securities offerings.
The settlement agreement includes asset freezes and other emergency relief, civil penalties and the return of allegedly ill-gotten gains with interest in amounts to be set later by the court. Voight also consented to being barred from serving as a public company officer or director. He is also permanently barred from participating in the offer, purchase, or sale of any security except for his own personal account.
“Voight wooed investors with promises of outsized returns and once-in-a-lifetime investment opportunities. But, like all Ponzi schemes, we allege that this one collapsed when Voight couldn’t find enough new money to keep up with his false promises,” said David Peavler, acting regional co-director of the SEC’s Fort Worth office.
The SEC named several defendants in the case, including InterCore Research Canada, for the purpose of recovering any allegedly ill-gotten gains. The SEC says that it will litigate its claims against InterCore and InterCore Research.