The Securities and Exchange Commission (SEC) charged a Pennsylvania investment manager and his companies with operating a Ponzi scheme that caused investors to lose $400 million.
Specifically, the SEC charged Daryl F. Heller of Pennsylvania and his companies, Prestige Investment Group, LLC and Paramount Management Group, LLC, with operating a Ponzi scheme from January 2017 through June 2024.
According to the complaint, Heller and Prestige raised more than $770 million from approximately 2,700 investors, many of whom are retail investors, to invest in ATMs operated by Paramount.
The SEC’s complaint alleges that Heller used his control of Prestige and Paramount to create the false impression that they were running a successful, nationwide ATM network and paying investors fixed monthly distributions from income earned from ATM transaction fees and related charges.
However, the reality was that the defendants misrepresented the size and profitability of the ATM network, the SEC alleges. The SEC also alleges that they paid distributions to investors primarily using money from new investments and high-interest, short-term loans. Further, the SEC alleges that Heller misappropriated more than $185 million of investor funds for his own benefit, including for a beach house and his other businesses, according to the complaint.
“Heller allegedly exploited his connections to his community and deceived retail investors into thinking the ATM investments were safe and reliable, when in reality he used only a fraction of investor funds to buy ATMs and misappropriated $185 million,” Scott Thompson, associate director of enforcement in the SEC’s Philadelphia Regional Office, said. “The SEC remains committed to diligently pursuing those who prey on hard-working investors and holding wrongdoers accountable.”
The SEC’s complaint was filed in U.S. District Court for the Eastern District of Pennsylvania. Heller, Prestige, and Paramount were charged with violations of the anti-fraud provisions of the federal securities laws. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants and a conduct-based injunction and officer and director bar against Heller.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Heller.