Mx Factor Ponzi Scheme Ending
The SEC announced on June 13th that "United States District Judge Virginia A. Phillips issued a final judgment against Daniel Berardi, Jr., Thomas Hawkesworth and Randall W. Harding ordering disgorgement, prejudgment interest, and civil penalties for their roles in perpetrating a Ponzi scheme based in Southern California. The judgment orders Berardi and Hawkesworth, managing members of BBH Resources, LLC, to pay over $11 million in disgorgement, prejudgment interest, and civil penalties. The judgment orders Harding, managing member of JTL Financial Group, LLC, to pay over $17 million in disgorgement, prejudgment interest, and civil penalties"
This ponzi fraud first came to the attention of the SEC in March, 2004. According to the original complaint "filed on February 26, 2004 in federal court in Riverside, alleges that the defendants fraudulently induced at least 247 investors nationwide and in Mexico to invest in Mx Factors' notes, which purportedly pay a "guaranteed" return of 12% in 60 or 90 days. Mx Factors claims that it will use the investor funds to provide its clients - construction contractors, wholesalers, and manufacturers - with accounts receivable financing, secured by the client's assignment of its accounts receivable. The defendants also represent that investor funds are safe because at least 70% of the receivables are backed or funded by the government.
According to the complaint, these representations are false. Mx Factors has actually been operating a Ponzi scheme, and at least $19.9 million in new investor funds has been used to pay existing investors. At least $5.64 million has been misappropriated (1) to finance a crab fishing business, (2) to pay the personal expenses of Harkless, Berardi, and Hawkesworth, including mortgage payments and credit card bills, and (3) to fund overseas bank accounts. Additionally, the complaint alleges that BBH, Berardi, and Hawkesworth have skimmed $1.3 million in investor funds by failing to turn them over to Mx Factors. The complaint further alleges that BBH Resources and JTL Financial have each received undisclosed sales commissions of at least 12%."
Mx Factor notes? Nice name. Any bets as to the fees of the receiver?
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