MANHATTAN (CN) – The SEC claims the Rockford Funding Group siphoned off more than $10 million from investors and stashed it in foreign banks under false pretenses. The firm promised hefty returns on bulk-purchased personal injury settlements but never invested a dime, the SEC says in its federal complaint.
SEC prosecutors say the Rockford Funding Group of New York City began aggressively cold-calling people in December 2008. It snagged more than 200 investors in 41 states by guaranteeing 15 to 20 percent annual returns on “fixed dividend contracts” that it claimed were derived from buying personal injury settlement receivables, the SEC says.
But the agency says Rockford has no structured settlement assets. The SEC says Rockford fabricated a history and distributed promotional materials that included fake credentials and outlandish assurances of returns.
Rockford simply lied to its clients, the SEC says. Though Rockford had been around for only a year, it claimed in its promos that since 1999, its portfolio “has increased 251 percent compared to a 12.8 percent increase in the Dow Jones Index,” according to the complaint.
Rockford’s assertion that it had an $800 million pipeline of investments and major institutional clients was bogus, the SEC says.
Rockford’s claim to be a member of the Securities Investor Protection Corporation, was another lie the SEC says: But Rockford is not insured by the SIPC and has not even registered any securities.
“Rockford Group dressed itself up as a high-powered firm with a safe strategy to make huge returns, but everything was a lie,” SEC Regional Director George Canellos said in a statement announcing the filing of the complaint.
“Rockford Group pressured investors through cold calls and fooled them with a Web site.”
It was a classic Ponzi scheme in which new suckers were paid off with old money, while the bosses skimmed off the top, the SEC says: most of the money Rockford got was put into shell corporation accounts at banks in Latvia and Hong Kong.
Rockford’s president and sole member, Genadi Yagodayev, wired more than $10 million to 12 corporations whose relationships to the firm are unknown, according to the complaint.
Yagodayev did not return phone calls.
A judge granted the SEC’s request to freeze Yadogayev’s assets and all of Rockford’s accounts.