Colorado man fleeced investors of millions in diamond scam, SEC says
A Colorado man who raised $17 million from investors by promising big returns trading diamonds and bank notes was actually running a Ponzi scheme and using the money to finance a comfortable lifestyle, the Securities and Exchange Commission has alleged in a lawsuit.
A federal judge in Denver, acting at the SEC’s request, froze the assets of Richard Dalton and Universal Consulting Resources on Monday.
Dalton, who lives in Golden, Colo., launched the scheme in early 2009, promising investors returns of 120% annually in the diamond fund and 48% to 60% in the trading fund. But instead of investing as promised, Dalton used new investor money to make monthly interest payments to earlier investors, creating a loyal following of happy investors, the SEC said.
Investors from 13 states were victimized, according to the SEC, which said some investors were so pleased with the results that they gave Dalton money from their self-directed Individual Retirement Accounts. One investor was guaranteed profits of 75% to 80% per month, the lawsuit said.
Dalton used more than $1 million of investor money on personal expenses, including $936,000 on a house, $38,000 for a Toyota truck, $35,000 in cosmetic dentistry and more than $5,000 for his daughter’s wedding reception, the SEC alleged.
“Dalton made his Ponzi scheme falsely appear profitable by continuing to bring in new investor money,” said Donald Hoert, director of the SEC’s Denver regional office. “Investors should be skeptical when someone promises low risk and high guaranteed returns.”
In addition to the asset freeze, the SEC is seeking an order requiring Dalton to repay the stolen money, plus financial penalties and interest.
Dalton could not be reached.
-- Stuart Pfeifer