Colorado Securities Commissioner Tung Chan issued separate orders against two “fraudulent” firms last week, the state's division of securities regulatory agencies 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, where the agency is located, claiming that “the companies are fraudulent and use false statements on their websites. the Internet to cloak itself in legitimacy to lure in victims seeking investment advisory services.”
“I've never heard of that before,” Essential Edge Compliance Outsourcing co-owner and Managing Director Sandy Ressler said of the firms' odd choice of address.
“It seems like a very strange coincidence, but many of these scam artists pull the same trick using multiple identities,” he said. “I don't believe in coincidences, and I don't believe in this case either, especially when the regulator comes up with these two examples of who they want to shut down.”
Each was granted an order to show cause why a final cease and desist order should not be issued against the unlicensed investment adviser before the end of the month.
Also doing business as Fluxia Group Investment LTD, the GoDaddy-hosted Fluxia website appears to have been owned by someone in China and taken down in December, according to state investigators.
In addition to the fake address, investigators said the site used a stock photo obtained 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 “super powerful trading system” that may not exist.
The entity registered with the Securities and Exchange Commission in March 2023, but the registration was withdrawn in August.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 issued.
An individual identified as Fluxia's chief compliance officer reportedly spoke with someone from the state early in the application process, asked to communicate via email, and then cut off communication altogether. Investigators found a parking lot and virtual office space at the mailing address provided,
In the case of Joyce Dunbar, investigators found no attempt at recording. The CRD number attached to someone with that name on the website belongs to a Georgia adviser, and the identification number given to the Colorado secretary of state belongs to Mary Wubker Asset Management in Denver.
Dunbar's website also used a fake image to represent her fan, featuring a photo taken from the website of a Florida attorney who swore in an affidavit that she had no knowledge the site was using the image her.
Dunbar's website, which was taken down Friday and returned online Monday morning, includes glowing testimonials and offers three bitcoin investment plans that promise “outrageous” returns, according to DORA — including weekly returns of 20 % with an investment of at least $100,000. It also claims that Joyce Dunbar is “a fiduciary financial advisor” who has passed at least eight securities exams.
“The division has no record indicating that Dunbar ever had a securities license,” investigator Kristopher Ostrom wrote in the petition to the court.
After calling 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 contact Joyce Dunbar and Fluxia were unsuccessful.
Ressler said he doesn't see this kind of thing happening often “anymore,” crediting state and federal agencies.
“The 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 is the regulators and I'm glad to see they're doing their job. Between the states and the federal regulators, I think they do a pretty good job of policing obvious fraud, and this is a good example of that.”
“It is always good when states are proactive in protecting investors, whether on a website that is national or in their own backyard,” he added. “Especially given the proliferation of the Internet and what we've seen over the last decade in terms of Internet-based fraud. I saw something a few weeks ago that said people lost more than $12 billion to online scams in the US last year.”