By Paul Vordran
The SEC has filed charges in federal court in Denver against Mark Ray and six companies he controls alleging violations of the securities laws. The alleged scheme raised money to benefit Ray’s cattle and marijuana companies by promising exceptional rates of return. At the height of the scheme, which started in 2014, Ray had $140 million dollars per month under his control. Ray is alleged to have run both a cattle trading business and Colorado-licensed marijuana business.
Ray’s capital-raising efforts predominantly took the form of short-term promissory notes. The structure of this investment led investors to think they were giving up their capital for short periods of time in exchange for returns ranging from 10 – 20%. In addition, Ray solicited funds from investors who were unsophisticated in either cattle or marijuana, and persuaded investors that he was a knowledgeable expert, using companies he formed with names such as MR Cattle Production Services, RM Farm & Livestock, and Universal Herbs.
Ray is what the SEC calls a “repeat offender.” Ray had previously been barred by the Illinois Secretary of State from selling securities in another cattle business that operated as a Ponzi scheme. Yet even given this publicly available background, Ray’s brazen behavior engaging in similar conduct was successful in duping millions from investors. As stated in the Complaint, “Despite the bar, Ray solicited and accepted investments from residents of Illinois in connection with his current Ponzi scheme.”
Recently, I published a blog reminding investors of SEC warnings issued in 2018 that remain true today (see Buy immediately” and get a “free meal” with that Ponzi scheme). Promises of high and overly consistent returns from unlicensed and unregistered sellers should raise red flags for investors and sellers.
If you are an adviser who sold these investments without knowledge that they were unlawful, or have received a notice from regulators, take steps to protect yourself and your retail clients.
Paul Vorndran, Esq., has represented the Colorado Securities and Insurance Commissioners and brought enforcement actions against both promoters and non-securities licensed, independent insurance agents. Now he works the other side, advising and defending licensed insurance agents and investors. He can be reached at email@example.com or 303.573.1600.
This communication is provided for your information only and is not intended to constitute legal advice or legal opinion as to any situation. You should not take, or refrain from taking, any action based on information in this article, without seeking legal counsel from an attorney on your particular facts and circumstances. Jones & Keller would be happy to provide you with specific advice about specific situations, if desired. Do not hesitate to contact us.