In October 2009, the Securities and Exchange Commission (SEC) announced that it filed an emergency civil action in the U.S. District Court of the Middle District of Florida, Orlando Division, charging David F. Merrick, a resident of Apopka, Florida, Traders International ReturnNetwork (TIRN), MS, Inc., GTT Services, Inc., MDD Consulting, Inc. and Go! Tourism, Inc. with fraudulent conduct.
The SEC’s complaint alleged that, since at least July 2008, Merrick and entities under his control engaged in a fraudulent scheme to misappropriate investors’ funds for his personal use and to repay other investors in a Ponzi scheme, raising at least $22 million from at least 2500 investors throughout the United States.
The complaint alleged that Merrick, as an investment adviser, and TIRN intentionally misled investors in TIRN by misrepresenting that their money would be used to buy Forex, international bonds, international stocks and other investments.
The complaint alleged that, instead of purchasing these investments, Merrick and TIRN transferred investor funds among entities controlled by Merrick, including MS, GTT Services, MDD Consulting and Go! Tourism, and misappropriated at least $3.7 million of the funds for Merrick’s personal expenditures and to pay credit cards debts of MS and GTT Services. The complaint also alleges that Merrick and TIRN operated a Ponzi scheme, using new investor funds to repay existing investors.
The complaint alleged that at least $8.8 million was transferred to Anres Technologies Corporation , a privately-owned company that issues pre-paid debit cards. The complaint further alleges that Merrick and TIRN falsely represented that investors requesting a withdrawal of funds would receive a debit card loaded with their initial investment and return on their investments, when, in fact, the money loaded on the cards was money from other investors. The complaint also alleged that at least $2.3 million of investor funds were transferred to accounts in Panama, Mexico, Malaysia, Switzerland and the Netherlands.
In addition, the complaint alleged that TIRN unlawfully operated as a foreign investment company in the United States, Merrick and TIRN sold securities, namely, interests in TIRN, in a public offering without registering the securities with the Commission, and Merrick and TIRN also conducted business as broker-dealers without registering with the Commission.
On May 12, 2010, the SEC announced that to settle the case, the defendants consented to the entry of a permanent injunction prohibiting future violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Investment Advisers Act Section 206. In addition, Mr. Merrick and TIRN were enjoined from violating Securities Act Section 5, Section 7(d) of the Investment Company Act and Section 15(a)(1) of the Exchange Act. In a related criminal case Mr. Merrick pleaded guilty to money laundering and conspiracy and agreed to forfeit cash and property valued at $8 million and to make complete restitution.
Avoid becoming a victim of investment fraud. Protect yourself today by contacting Jeffrey Wittenberg, Esq., before you invest.