A Colorado investment advisor defrauded almost two dozen investors in the course of raising about $3.2 million, eventually using a portion of those funds to make Ponzi-like payments to repay existing clients, according to a newly filed complaint from the Securities and Exchange Commission.
According to the complaint filed in the U.S. District Court for the District of Colorado, Ann M. Vick, the founder and owner of AMV Investments, told investors she was a successful options trader and boasted that she could secure “exorbitant” returns on their investments.
From August 2018 through July of the following year, Vick raised about $195,000 from three investors, pooling the funds and commingling them with those in her own brokerage account. In August 2019, Vick formed AMV and began soliciting more investors, according to the commission. As a part of her pitch, Vick guaranteed investors would get monthly interest payments of 5% to 10% per month.
The complaint contends that the company had no “prospectus, private placement memorandum or other traditional offering documents,” but by January 2021, Vick and AMV had raised about $3.2 million through selling promissory notes mainly issued by the firm. But, according to the commission, Vick’s stock option trading before and during AMV’s work with investors was volatile, with Vick’s performance between 2014 and 2018 featuring “erratic swings” betweens gains and losses every month.
“Over time, in an effort to obtain higher returns, Vick’s trading strategy became more risky, increasingly relying on margin trading to gain more exposure to the price fluctuations in the options markets,” the complaint read. “She generated profits in early 2019, but starting in August 2019, after she began raising money from AMV investors, she incurred significant trading losses, in large part due to her risky trading strategy.”
In December 2019, Vick lost $1.4 million, and in March 2020 she lost another $1.1 million. The losses meant that, while the company continued to raise funds from investors promising high returns, it could not repay prior investors’ principal or make the guaranteed monthly interest payments, according to the SEC.
The complaint stated Vick misappropriated about $570,150 of investors’ funds, transferring them into personal and corporate bank accounts she never used for investments, with much of it going into a personal brokerage account. The SEC also claimed Vick used about $1.9 million in new and existing investors’ principal to make Ponzi-like payments to cover the principal and promised monthly interest payments to previous investors.
Vick did not admit or deny the allegations in the complaint, but she consented to a judgment enjoining her from future violations or selling securities. Vick also agreed to pay $570,150 in disgorgement (with a matching monetary civil penalty), as well as prejudgment interest totaling nearly $28,000.