SEC Obtains Asset Freeze Against Florida Operators of Alleged Ponzi Scheme Targeting Investors to Invest in Virtual Concierge Machines
According to the Securities and Exchange Commission (“SEC”), a federal judge in Florida has issued a temporary asset freeze against two companies and their owners for allegedly operating a Ponzi scheme that encouraged investors to make purported investments in virtual concierge machines (VCM’s). According to the government, the companies, JCS Enterprises, Inc. (“JCS”) and T.B.T.I. Inc. (“TBTI”), and the principals, Joseph Signore and Paul L. Schumack, II, located in South Florida touted investments in VCM’s on You Tube, through e-mail solicitations, and investment seminars. According to the companies’ You Tube video, a VCM is an ATM-like machine that could be placed in businesses such as hotels, restaurants, and stadiums to advertise available products and services via touch screen. In addition, the machines could provide printable tickets and coupons.
According to the government, the companies asserted that investors could purchase a VCM for as little as $3,500 and earn income through businesses paying to advertise on the machines. The SEC claims that the investors were promised guaranteed returns on the VCM’s which were to be located, placed and managed by JCS and TBTI. The SEC’s press release claims the companies raised approximately $40,000,000 since 2011. The government contends that investors were promised that they would be informed as to the location of each VCM they purchased and would be provided online access to monitor the activity of their VCM. In reality, the SEC alleges that investors’ funds were used to pay earlier investors, were diverted to unrelated business ventures, or used to pay personal expenses of Signore, Schumack and their families. For example, the SEC claims that Signore diverted $2 million dollars directly to himself and his family members, in addition to $56,000 that was spent at restaurants, stores, and a tanning salon. Schumack allegedly diverted around $4.8 million, in addition to spending around $23,000 on restaurants, stores, and a nutrition center.
The complaint filed by the SEC alleges violations of the federal securities laws and seeks the return of ill-gotten gains, interest, and penalties. The order for temporary asset freeze requires the companies and principals to provide accountings and also appointed a receiver for JCS and TBTI.
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