Securities News Releases
Wednesday, May 17, 2006
Contact: Stacie Temple, (573) 526-5076
Contact: Mike Seitz, (573) 526-0949
Carnahan's Office Orders Canady Holdings, Inc. to Stop Ponzi Scheme
Jefferson City, Missouri -- Secretary of State Robin Carnahan's Commissioner of Securities Matt Kitzi recently ordered Canady Holdings, Inc. and its agents to stop fraudulently selling unregistered, nonexempt securities in Missouri.
After an investigation, the Securities Division concluded that, in 2005 through its Kansas City and Chicago agents, Canady Holdings convinced two Missouri residents to invest over $18,000. The agents allegedly promised the investors that Canady Holdings - a Georgia based business - would use the money to trade foreign currencies. Canady Holdings' agents also allegedly promised the Missouri residents that they would receive a 1000% return in 30 days.
However, the Order asserts that instead of sending the investors their full profits, the Canady Holdings' agents convinced the investors to reinvest the profits, which were significantly less than promised, for another 30 days.
At the time of the Commissioner's Order and over one year after the re-investment, the Division states that neither Canady Holdings nor the agents had returned to the investors the full amount of their original or reinvested principal, or the promised returns.
Canady Holdings and its agents, Jacqueline Boykin of Chicago, Illinois; Julie M. Teng of Kansas City, Missouri; and Laurence Young of Grandview, Missouri, are all charged in the Order with selling unregistered securities and unlawfully operating as agents in Missouri.
Canady Holdings, Boykin and Teng are also charged with securities fraud rising from a failure to state necessary facts. In addition, Canady Holdings and Young are charged with securities fraud stemming from a course of business that operated a fraud or deceit upon an investor.
The alleged activities of Canady Holdings and its agents indicate characteristics of a Ponzi scheme, an investment scam included in Carnahan's list of Top 10 Threats to Investors for 2006, which involves "robbing one person to pay another." In these schemes, initial investors are paid off with money taken from new investors. As long as a steady flow of new investors keeps coming in, there will be money to pay off the old investors. However, when new investors stop coming in, the scheme collapses, investors lose their money and the fraudsters walk away rich.
"Anytime investors are promised unrealistic, high returns, they should be wary," said Carnahan. "I encourage investors to protect themselves from these types of scams by contacting the Securities Division to get as much information as possible before they invest their hard-earned money."
For more information regarding investments and fraud protection, or for information regarding a company or representative, visit the Secretary of State's web site at www.sos.mo.gov/securities or call the toll-free investor hotline at 1-800-721-7996.