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Utah Man Charged With Defrauding Investors in a Ponzi Scheme

(HedgeCo.Net) According to a complaint filed by the SEC, from at least December 2016 through April 2018, Landon M. Smith of Salt Lake City allegedly operated a fraudulent scheme that raised nearly $2.5 million from over fifty investors. To entice investors, Smith allegedly falsely told them that he was a real estate wholesaler who used investor funds for earnest money to purchase and then quickly resell properties. Smith also allegedly promised investors returns of up to 100%. The SEC’s complaint alleges, however, that Smith never purchased the purported properties. Instead, Smith allegedly used new investor funds to pay returns to earlier investors in a classic Ponzi scheme fashion and to pay his personal expenses, including his rent and trips to Hawaii. To conceal his fraudulent scheme, Smith also created false real estate contracts with forged property owner’s signatures.

The SEC’s complaint, filed in U.S. District Court for the District of Utah, charges Smith with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the registration provisions of Section 5 of the Securities Act. Smith has agreed to a bifurcated settlement where he will be permanently enjoined from violating these provisions. The settlement, which is subject to Court approval, reserves the issues of disgorgement, prejudgment interest, and a civil penalty for further determination by the court upon motion of the SEC.

In a parallel action, the U.S. Attorney’s Office for Utah today announced criminal charges against Smith.

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