A Pennsylvania man and his companies are facing criminal and civil charges in connection with an alleged multi-year Ponzi scheme.
The Securities and Exchange Commission announced that it has charged 55-year-old Daryl F. Heller, Prestige Investment Group, LLC and Paramount Management Group, LLC, in the case that was reported to have caused investors to lose about $400 million.
The SEC’s complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, alleges that from January 2017 through June 2024, Heller and Prestige raised more than $770 million from approximately 2,700 investors, many of them retail investors, to invest in automatic teller machines operated by Paramount. The firm, based in Lancaster, purchased, installed, operated, maintained, and processed transactions for the ATMs.
Heller is accused of using his control of Prestige and Paramount to create the false impression that they were running a successful, nationwide ATM network and paying investors fixed monthly distributions from income earned from ATM transaction fees and related charges.
But the SEC said the defendants actually misrepresented the size and profitability of the ATM network and paid distributions to investors mainly by using money from new investments and high-interest, short-term loans. According to the complaint, Heller also misappropriated over $185 million of investor funds for his own benefit, including for a beach house and his other businesses.
“Heller allegedly exploited his connections to his community and deceived retail investors into thinking the ATM investments were safe and reliable, when in reality he used only a fraction of investor funds to buy ATMs and misappropriated $185 million,” said Scott A. Thompson, Associate Director of Enforcement in the SEC’s Philadelphia Regional Office.
Authorities said that to carry out and conceal the scheme, Heller created false and fraudulent records which grossly misrepresented the number of ATMs in Paramount’s network and grossly overstated the revenues being generated by those machines. According to the charges, Heller used these documents to satisfy existing investors, solicit new investors, and deceive others by falsely representing that the ATM investments were legitimate, and the ATMs were generating enough revenues to make investor payments.
Heller, Prestige, and Paramount are charged with violations of the antifraud provisions of the federal securities laws. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants and an injunction and officer and director bar against Heller.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of Pennsylvania announced criminal charges against Heller. He was arrested and charged by indictment with one count of securities fraud and four counts of wire fraud, If convicted, he faces a maximum possible sentence of 100 years’ imprisonment.
Ponzi schemes are one of the many forms of securities fraud that can cause harm to investors. The attorneys at Hyman Cotter PC have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter PC at 312-291-4600 or through our online contact form for a no-cost evaluation of your matter.
