The Securities and Exchange Commission and Justice Department each filed indictments on Tuesday related to a $21 million Ponzi scheme targeting members of a large church in central Illinois.
The scheme was perpetrated by the CEO of businesses he claimed were family values-based, as well as his father-in-law. The two misappropriated at least some of the investors' funds for their own personal use, including for vacations, entertainment and payments for a luxury rental home, according to the indictments.
According to a DOJ indictment filed in U.S. District Court for the Central District of Illinois in Urbana, a grand jury charged Brett Michael Bartlett, 37, of Yorba Linda, California, and his companies 7M eGroup Corp. and Dynasty Toys with three counts of wire fraud and one charge each of mail fraud, securities fraud and money laundering.
The grand jury charged the defendants with knowingly devising a "scheme and artifice to defraud investors and for obtaining money and property from the investors by means of materially false and fraudulent pretenses, representations and promises," according to the indictment. The alleged fraud occurred from about May 2015 to about Aug 20, 2020.
The defendants "dramatically overstated the success" of the companies run by Bartlett and the returns they generated for investors while also lying about the companies' assets and failing to disclose the companies' struggles while continuing to solicit investments, according to the indictment.
The SEC, meanwhile, filed a complaint on the same day in U.S. District Court for the Central District of California, against the same defendants, along with Bartlett's father-in-law, Scott A. Miller, 63, also of Yorba Linda, and two other affiliated firms: Dynasty Inc. and Concept Management Co. According to the complaint, Miller co-founded and co-owned 7M eGroup Corp. and Dynasty Toys and served as director and secretary of both.
The SEC charged the defendants with fraudulent securities offerings that raised at least $20.5 million and violated the antifraud provisions of federal securities laws.
The complaint also charged the defendants, with the exception of 7ME, with violating the registration provisions of the Securities Act. The SEC is seeking permanent injunctions, including conduct-based injunctions, disgorgement with prejudgment interest, civil penalties and officer and director bars.
