The SEC shuttered operations of a mother-son duo that defrauded investors through a Ponzi-like crypto scheme.
The pair promised up to 30% returns based on trading recommendations made by an AI “supercomputer.”
Instead, they misused investor money by making Ponzi-like payments.

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The Securities and Exchange Commission announced it shut down the operations of a mother-son duo that defrauded investors through a cryptocurrency Ponzi scheme that promised up to 30% returns based on the trading recommendations of an artificial intelligence “supercomputer.”

Since May 2018, Joy Kovar, 86, and her son Brent Kovar, 54, raised more than $12 million from at least 277 retail investors through their Las Vegas-based firm, Profit Connect Wealth Services.

The SEC has filed an emergency action and obtained a temporary restraining order and asset freeze to halt the ongoing fraud.

The duo, according to the agency, convinced investors their money would be invested in securities and cryptocurrencies based on recommendations made by an alleged AI supercomputer. This machine, the duo said, consistently generates enormous returns of up to 30% per year with monthly compounding interest.

The agency, however, discovered that more than 90% of the firm’s funds came from investors. The Kovars also did not use any funds received to trade securities, buy cryptocurrencies, or do any of the things they promised their investors.

Instead, they misused investor money by transferring millions of dollars to Joy Kovar’s personal bank account to pay promoters and to make Ponzi-like payments.

“The defendants targeted investors who were looking for safe products for their retirements and their children’s educations,” Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said. “Investors should be wary of individuals and firms who guarantee double-digit returns with no risk of loss.”

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A hearing is scheduled for July 26, 2021.

The SEC’s complaint charges the Kovars with violating the antifraud provisions of securities laws. The complaint seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties.

This scam isn’t the Kovars first brush with authorities. In March 2009, the SEC filed a civil injunctive action against Tampa-based Sky Way Global, an internet service provider and purported anti-terrorism company. The company’s principals are Brent, his father, Glenn Kovar, 75 at the time, and James Kent.

Cryptocurrency fraud schemes have been on the rise as digital assets gain popularity, and fraudsters have become creative in the ways they swindle people.

Some instances included fraudulent cryptocurrency domain registrations, blockchain scams, overseas investment schemes, and criminals impersonating Elon Musk.

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Source:: Business Insider

      

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