The Securities and Exchange Commission on Monday obtained an emergency action, temporary restraining order and asset freeze to halt an alleged fraudulent offering in which a mother and sun told backers they would use an "artificial intelligence supercomputer" to invest their money.
The action, which involved Las Vegas-based Profit Connect Wealth Services Inc. and Las Vegas resident Joy I. Kovar and her son, Brent Kovar, has raised more than $12 million from at least 277 retail investors.
The complaint alleges that Profit Connect actively encourages investors to use money from retirement funds and home equity, and targets investors looking to build educational funds for their families.
According to the SEC's complaint, which was filed in U.S. District Court for the District of Nevada and unsealed July 16, the defendants have raised investor funds through Profit Connect since at least May 2018 while assuring investors that their money would be invested in securities trading and cryptocurrencies based on recommendations made by an "artificial intelligence supercomputer."
As alleged, "Profit Connect claims that its supercomputer consistently generates enormous returns, which in turn allows Profit Connect to guarantee investors fixed returns of 20-30 percent per year with monthly compounding interest," the order states.
According to the complaint, however, more than 90% of Profit Connect's funds came from investors.
