International Law

Craig T. Jolly and Quest Holdings Ponzi

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From the SEC Press Release on the Jolly and Quest Holding Ponzi scheme.

The Securities and Exchange Commission today filed securities fraud and other charges against Quest Holdings, Inc. and its principal, Craig T. Jolly, of Spokane, Washington, for operating an internet-based Ponzi scheme promising monthly returns of up to 19.5 percent.

According to the complaint, defendants Quest and Jolly raised approximately $4 million from more than 200 investors, located throughout the country and abroad, through the issuance of short-term securities promising monthly interest rates as high as 19.5 percent.

Jolly raised funds by offering and selling Quest securities through Quest's website, EarnByLoaning.com. As set forth in the complaint, Jolly claimed to be active in the investment community and financial markets and falsely assured investors that Quest had a reserve fund to ensure that they would be repaid.

In reality, the Commission alleges, Jolly invested only about one-third of the investor funds he received, on which he suffered hundreds of thousands of dollars in trading losses.

The complaint also alleges that defendants operated a Ponzi scheme and repaid purported profits to investors from funds provided by later investors, not from earnings on Quest's investment activities.

In addition, the Commission alleges that Jolly misappropriated at least $628,000 of investor funds, which he used for his own stock trading and to pay for his vehicles, medical bills and other personal expenses.

The Commission's complaint, filed in federal district court for the Eastern District of Washington, charges Quest and Jolly with violating the antifraud and registration provisions of the federal securities laws, and seeks entry of an order for an asset freeze, injunctions, an accounting, disgorgement, and civil penalties.

The Commission's litigated action against Jolly and Quest charges both with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission seeks permanent injunctions, an accounting, appointment of a receiver, an asset freeze, disgorgement with prejudgment interest, and civil monetary penalties.

Full post as published by Misleading Advertising Law on February 09, 2009 (boomark / email).