A Texas businessman allegedly told investors that their money would fund technology to prevent drowsy driving accidents, but in reality he took them on a road to nowhere.
Frederick Alan Voight, of Richmond, Texas, agreed to settle securities fraud charges brought by the Securities and Exchange Commission in U.S. District Court in Houston after allegedly operating a $114 million Ponzi scheme.
The SEC charged Voight with defrauding more than 300 investors in multiple offerings of promissory notes issued by two partnerships he owns, F.A. Voight & Associates and DayStar Funding.
Voight allegedly promised investors returns as high as 42 percent a year from loans to small public companies, but according to the SEC complaint, most of the funds were used to pay earlier investors, and almost $22 million of the ill-gotten gains remain unaccounted for.
As part of his settlement, Voight consented to being barred permanently from serving as the director or officer of a public company and from participating in the offer, purchase or sale of any security except for his own personal account.
According to the SEC, Voight raised $13.8 million in spring 2015 that he claimed would be lent to a start-up named InterCore Inc. to fund the deployment of a “Driver Alertness Detection System.”
Starting in October, Voight allegedly wrote to prospective investors about an opportunity to help InterCore install the driver alertness technology into “several million trucks and buses,” which he said was enough for the company to pay the 30 percent to 42 percent annual interest rates on the promissory notes.
The SEC complaint alleges that Voight was aware his claims were false because he sat on InterCore’s board and was aware that the Delray Beach, Fla., company was financially troubled and had no means to pay back the loans. Voight used funds from the driver alertness investors to make payments to earlier investors, or funneled them to InterCore through two of his other partnerships, Rhine Partners and Topside Partners, according to the SEC.
InterCore allegedly sent the funds to InterCore Research Canada, it’s Montreal-based subsidiary, where the funds seemingly disappeared. Voight allegedly benefitted from routing funds through Topside and Rhine, including fees and InterCore stock warrants, that he never disclosed to the investors.
Voight and DayStar have consented to pay civil penalties and disgorgement and return allegedly ill-gotten gains with interest in amounts to be set later by the court. F.A. Voight & Associates, InterCore and InterCore Research Canada will also pay penalties and disgorgement in amounts yet to be determined.