The Securities and Exchange Commission (SEC) says it has received a temporary restraining order and asset freeze to halt an alleged ongoing offering targeting retail investors. Reportedly, 277 individuals have committed $12 million to a firm called Profit Connect Wealth Services Inc, operated by a mother-son team of Joy I. Kovar and her son, Brent Kovar, who was previously involved in a pump and dump scheme.
According to the SEC’s complaint, the defendants raised funds 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% per year with monthly compounding interest.
The SEC’s complaint alleges that the defendants did not use funds received from investors to trade securities, buy cryptocurrencies, or do any of the things that Profit Connect promised its investors it would do with their money. Allegedly, the complaint states that the defendants misused investor money by, transferring millions of dollars to Joy Kovar’s personal bank account, paying millions of dollars to promoters, and making Ponzi-like payments to other investors.
Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. commented:
“As we allege, the defendants targeted investors who were looking for safe products for their retirements and their children’s educations, offering a money back guarantee on top of the phenomenal results they promised to achieve using a purported ‘super computer. Investors should be wary of individuals and firms who guarantee double-digit returns with no risk of loss.”
A hearing is scheduled for July 26, 2021, to consider, among other things, whether to continue the asset freeze, issue a preliminary injunction, order an accounting, and appoint a receiver over Profit Connect.