Colorado Securities Commissioner Tung Chan issued separate orders against two “imposter” firms last week, the state department of regulatory agencies’ division of securities said.
Joyce Dunbar Management and Fluxia Capital Management both falsely claimed to have offices in the same building as the Colorado Department of Regulatory Agencies, which houses the division alleging “the companies are fraudulent and using false statements on their websites to cloak themselves in legitimacy to lure in victims who are seeking investment advisory services.”
“I’ve never heard of that before,” co-owner and Managing Director of Essential Edge Compliance Outsourcing Sandy Ressler said of the firms' uncanny choice of address.
“It does seem like a very odd coincidence, but a lot of these scam artists do the same scam using multiple identities,” he said. “I don’t believe in coincidences, and I don’t in this case either, especially with the regulator coming out with these two examples of who they want to shut down.”
Each has been served with an order to show cause as to why a final cease-and-desist order for unlicensed investment adviser activity should not be issued before the end of the month.
Also doing business as Fluxia Group Investment LTD, Fluxia’s GoDaddy-hosted website appears to have been owned by someone in China and was taken down in December, according to state investigators.
In addition to the false address, investigators said the site used a stock photo taken from the internet as the image of a Mark Peter Verwymeren, who appeared as either president and managing partner or CEO in various state filings. It also contained false claims about licensing, registrations and filing status and promoted a “robust super trading system” that may not exist.
The entity was registered with the Securities and Exchange Commission in March 2023, but the registration was withdrawn in August. A Kentucky state registration became invalid about two months ago, and while an application was filed in Colorado, no license was ever granted.
An individual identified as Fluxia’s chief of compliance reportedly spoke with someone from the state early in the application process, requested to communicate by email and then ceased communication altogether. Investigators found a parking lot and virtual office space at the mailing address provided,
In Joyce Dunbar's case, the investigators found no registration attempts. The CRD number attached to someone by that name on the website belongs to a Georgia advisor, and the identification number given to Colorado’s secretary of state belongs to Mary Wubker Asset Management in Denver.
The Dunbar website also used a false image to represent its namesake, featuring a photo taken from the website of a Florida attorney who swore in an affidavit that she had no knowledge that the site was using her image.
The Dunbar website, which was taken down on Friday and back online Monday morning, includes glowing testimonials and offers three bitcoin investment plans that promise “outlandish” returns, according to DORA—including weekly returns of 20% with an investment of at least $100,000. It also claims Joyce Dunbar is “a fiduciary financial advisor” who has passed at least eight securities exams.
“The Division does not have any records indicating Dunbar ever held a securities license,” Investigator Kristopher Ostrom wrote in the petition to the court.
After subpoenaing the domain host Namecheap.com, investigators learned that Martha Hess in Lineville, Iowa, owns the site.
The respondents have until April 29 to respond to the order. Attempts to reach out to Joyce Dunbar and Fluxia were unsuccessful.
Ressler said he doesn’t see this kind of thing happen often “anymore,” crediting state and federal agencies.
“Scammers do such a good job now,” he said. “Even the bad ones do such a good job of making their websites look legitimate that the only real line of defense are the regulators, and I’m glad to see they’re doing their jobs. Between the states and the federal regulators, I think they do a pretty good job of policing the obvious frauds, and this is a good example of that.”
“It’s always good when states are proactive in protecting the investors, whether it’s on a website that’s national or in their own backyard,” he added. “Especially given the prevalence of the internet and what we’ve seen over the last decade as far as internet-based scams. I saw something a few weeks ago that said people lost more than $12 billion to online scams in the U.S. last year.”