$114 Million Ponzi Is Over, SEC Says

HOUSTON (CN) - A Texan took 300 investors for a ride in a $114 million Ponzi scam by claiming his app could prevent drivers from falling asleep, the SEC claims in court.

The SEC sued Frederick Alan Voight, 58, of Richmond, and his companies DayStar Funding and F.A. Voight & Associates on Monday in Federal Court.

Voight and his partnerships issued bogus one-year promissory notes with promised returns as high as 42 percent, the SEC says. It also sued InterCore Inc., a publicly traded company of which Voight is 42 percent owner, and five other relief defendants. It claims InterCore's product, the "'Driver Alertness Detection System, or DADS'" was integral to Voight's Ponzi scam.

"An airbag is not a pillow," InterCore proclaims on a YouTube video touting its service, checked Wednesday.

InterCore claims in its ad that 250,000 drivers in the United States fall asleep at the wheel every day, and 100,000 accidents, 40,000 injuries and 1,500 deaths are linked to drowsy driving each year in the country.

InterCore's ad says it sends customers a camera to set up near the steering wheel and point at their face. "From a DADS camera we relay information captured from your face to your smart phone while you drive," the ad states.

InterCore claims its complex algorithms determine if a driver is tired and send them a wake-up alert on their phones.

Voight raised $13.8 million with a letter he wrote and sent to prospective investors in October 2014 urging them to act quickly, and promising 30 to 42 percent returns on DayStar promissory notes, the SEC says in the complaint.

In the offer letter, Voight said DayStar would loan the money to InterCore, to install the system in "several million trucks and buses," to generate millions in monitoring fees for InterCore. "When Voight wrote and distributed the offer letters, he knew there was no potential InterCore transaction - and thus no urgency to invest immediately," the lawsuit states.

Though Voight wrote that offer letter in 2014, the SEC says his Ponzi scam dates back to 2004. "Since forming FAVA [F.A. Voight & Associates] in 2004, Voight has raised approximately $114.1 million from at least 300 United States investors in a series of fraudulent promissory note offerings," the SEC states.

It says Voight routed the money through two of his other partnerships, relief defendants Rhine Partners LP and Topside Partners LP, to snatch $22 million in fees that are unaccounted for.

As in all Ponzi scams, the SEC says, Voight's collapsed when he could not raise enough new money to cover the promised returns to initial investors.

The SEC' charged him with securities fraud and making unregistered securities sales.

Voight's attorney said his client reached a settlement with the SEC and is handling everything on the up and up.

"Voight is looking forward to having all the facts come out and putting this matter behind him as soon as possible. He is cooperating with the SEC and as more information comes to light, the numbers in the SEC's allegations will go down," Brent Baker, with Clyde Snow Attorneys at Law of Utah, said in an interview.

The SEC said as part of the settlement Voight and DayStar "without admitting or denying the allegations" agreed to a permanent injunction against committing securities violations.

The SEC froze their accounts and they agreed to pay civil penalties, to be determined by the court. Voight consented to being barred from being an officer or director of any public company and from participating in the offer, purchase, or sale of any securities except for his own accounts.

Follow @cam_langford

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit