AUSTIN, Texas (CN) - Three so-called "brokers," who never held securities licenses, took $9 million in a prime bank scheme, swiped $1.8 million of it and sent $4.5 million to the "prime bank scam operators," the SEC claims in Federal Court. It sued Jennifer Dodge, Grant Carroll, Tamara Davis and The Cornerstone TKD, who sold 20 investors a bill of goods through Lakeway, Texas-based Quantum Funding Strategies.
Dodge, 48, of Lakeway, Texas, was the managing partner of Quantum Funding. She promised weekly returns of 25 percent to 100 percent, the SEC says. Such promises are the essence of prime bank schemes, which "lure investors with the promise of astronomical profits and the chance to be a part of an exclusive, international investing program," according to the complaint.
Carroll, 31, of Midland, Quantum's "Director of Securities," told investors he was a licensed securities broker, though he never was anything of the sort, the SEC claims.
Davis, 38, of Los Angeles is a managing member of Cornerstone; she never held a securities license and Cornerstone never registered with the SEC.
The SEC claims that Carroll stumbled upon the prime bank scheme on the Internet and told Dodge, a former coworker, about it. Without researching how the promised profits were being generated and without checking into the companies involved, Dodge pitched the investments to suckers by claiming, among other things, that she was "repeatedly successful" in high-yield investment transactions, according to the complaint. In reality, "Dodge never executed a successful transaction - either the investor lost his/her investment or the investor's funds were returned," the SEC says.
"Of the $9 million raised from investors: (a) Dodge retained approximately $1.45 million as 'fees,' which she used for travel, luxury items, and to pay personal expenses and the personal expenses of her significant other; (b) Carroll received approximately $363,000 in commissions; (c) Dodge refunded approximately $2.5 million to certain investors; and (d) Dodge sent $4.5 million to 'escrow agents' and third parties who operated the bogus high-yield trading programs," the SEC says.
It seeks disgorgement and penalties and an injunction ordering them not to do it again - ever.
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.