DALLAS (CN) - Two brothers ran a phony $6 million securities offering and Ponzi scheme that preyed on evangelical Christians tied to a private school, according to federal prosecutors.
The SEC sued Usee Inc. and brothers Terry Wiese, 64, of Little Elm, Texas, and Scott Wiese, 48, of Temecula, Calif., and three relief defendants.
The Wieses pumped Usee as a Dallas-area Voice over Internet Protocol company, the SEC says, and took money from 80 investors by promising returns of up to 1,000 percent in the first year.
"The Wieses solicited investments from their friends and families, nearly half of whom are teachers, staff, and parents of students at a Dallas-area Christian private school where Terry Wiese's wife works," the SEC says in its complaint.
"Between December 2009 and September 2010, brothers Scott and Terry Wiese raised almost $6 million from nearly 80 investors through fraudulent, unregistered offerings of stock and short-term, high-yield promissory notes issued by their company, Usee, Inc.," the complaint states.
"Focusing their securities offerings on evangelical Christians, the Wieses described Usee as a 'lifestyle tele-media company' that purportedly provided voice-over-internet-protocol ('VoIP') video services around the world.
"The Wieses promised investors large investment returns. Claiming to have secured multi-million dollar equity sales agreements and multi-billion dollar financing arrangements, the Wieses represented that investors who purchased Usee stock would receive at least ten times return in one year, while investors who purchased promissory notes would realize as much as 80 percent to 100 percent in 60 to 90 days. These claims were false.
"In fact, all but two investors lost the money they invested with Usee. The two investors who did receive partial payments were paid with money raised from other investors.
"The Wieses otherwise spent investor funds on payments to entities located in and outside of the United States, including to [relief defendant] NFY Financial Consulting PLLC, a Michigan based company that agreed to provide financing to Usee and to conduct platform trading on its behalf. Investors were not told about the diversion of their funds.
"Even after spending the near $6 million they raised and leaving Usee deeply in debt, the Wieses continued to mislead both existing investors and potential new investors, claiming that Usee was in the final stages of closing funding transactions from which the company 'expects to raise in excess of $4B in the next 18 to 24 months.' Once again, this was untrue."
Named as relief defendants along with NFY Financial Consulting are its directors, Nail Yaldo aka Neil Yaldo, both of West Bloomfield, Mich., and and Jack Skrelja aka Djeka Skrelja, of Farmington Hills, Mich.
According to the complaint: "Yaldo formed NFY in 2007 and he and Skrelja are its directors. They were introduced to the Wieses in 2010 through a mutual acquaintance. NFY claims to be a financial consulting that agreed to provide financing for Usee and to conduct platform trading - of foreign intrabank instruments - on its behalf.
"The Wieses failed to inform investors that they were not depositing their money in an escrow and instead transferring it directly to NFY's own accounts, and further failed to inform investors of Usee's belief that NFY would utilize investor funds to perform the supposed 'platform trading.'
"The Wieses believed that NFY's platform trading would return billions to Usee and its investors, clearing the way to complete the acquisition and redeem investors. But the Wieses failed to investigate NFY, Yaldo, or Skrelja; failed to conduct sufficient due diligence before opening the NFY Escrow Account; and did nothing to verify the legitimacy, feasibility, or reality of the supposed platform trading they anticipated NFY would undertake on Usee's behalf.
"NFY did not provide any financing to Usee and conducted no trades on Usee's behalf. Nevertheless, NFY obtained $1,536,500 from Usee, comprised of investor funds. Yaldo and Skrelja thereafter withdrew $641,480 and $256,300, respectively, of funds in NFY's bank accounts. The funds were ill-gotten by NFY, Yaldo, and Skrelja, and they have no legitimate claim to them."
The SEC said in a statement that the Wieses and Usee consented to permanent injunctions, agreed to disgorge $5.8 million and pay $300,000 in civil penalties.
The Wieses did not admit liability.
The SEC also wants to freeze the relief defendants' accounts.
Follow @davejourno
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