COLUMBUS, OHIO (CN) – A felon with a “long criminal record” and his wife took $70 million from 125 borrowers in a fraudulent “stock based loan program,” the SEC claims in Federal Court. Michael Spillan and his One Equity Companies took stock as collateral for loans of less value, then sold the stock, the SEC says.
Spillan, 41, of Gahanna, Ohio, “has a long criminal record that includes several convictions in the State of Ohio and one federal conviction, all relating to fraudulent conduct,” the complaint states. “In 2004 he was convicted on state charges of forgery, theft and unlawful possession of dangerous explosives. They theft and forgery convictions were for using false documents in an attempt to collect over $400,000 in unclaimed funds held by the State of Ohio that did not belong to him. He was released in March 2007, after servicing 26 months of a 4-year sentence.”
Also sued is his wife, Melissa K. Spillan, 38. “She helped run the stock loan scheme alleged herein while her husband Michael Spillan was in prison,” the complaint states. Both Spillans refused to respond to SEC questions.
Also sued are One Equity Corp., Triangle Equities, Victory Management Group, Dafcan Finance.
The SEC claims the Spillans raised “about $70 million from approximately 125 borrowers from all over the globe, by holding themselves out as stock based lenders, underwriters or administrators. The Spillans raised the money by inducing borrowers to transfer ownership of millions of dollars of shares of publicly traded stock to them as collateral for purported non-recourse loans based on a false promise to return the shares to borrowers who repaid their loans. Unbeknownst to the borrowers, the Spillans generally sold all of the shares that the One Equity Companies received from them to fund each loan. Because the One Equity Companies agreed to loan 10 to 50 percent less than the market value of the shares transferred, they retained substantial sales proceeds, even after funding each loan. They also received interest payments. The Spillans, however, did not set aside any cash reserves to repurchase and return shares to borrowers who repay their loans. Instead, they used all the money to pay expenses, including over $1 million in salary and other benefits to themselves. Currently, the Companies owe millions of dollars to certain borrowers, but do not have the stock or cash to repay them. The Spillans nevertheless continue to solicit new borrowers.”