Colorado Stockbroker Charged with Investment Fraud
Brian Elrod, a Buffalo Creek, Colorado stockbroker, has been accused of perpetrating a fraudulent investment scheme that raised millions of dollars from investors between March and November, 2009.
Elrod has been sued by the Securities and Exchange Commission for allegedly conducting a fraudulent offering of promissory notes. The Commission also sued California attorney Nova Dean Pack and accused him of recruiting investors for Elrod’s alleged scheme, in exchange for commissions.
Elrod’s investors were offered high-yield promissory notes issued by CFS Holding Company LLC (“CFS”), a Colorado company owned and managed by him, according to the Commission’s Complaint.
Brian Elrod assured his investors that their investments were guaranteed and secured, and told investors that their money would generate annual returns as high as 24%, according to the Commission’s allegations.
Elrod falsely represented to investors that the proceeds from their promissory notes would be used to expand a group of financial services companies owned and managed by him, the Commission charged.
In reality, Elrod converted his investors’ money and used them to support his and his family’s life style and pay for his personal expenses, the Commission alleged. Elrod also allegedly used investor money to make distribution payments to earlier investors, in Ponzi-scheme fashion.
Both Elrod and Pack agreed to settle the case filed against them by the Commission, without admitting or denying the SEC’s allegations. Pursuant to the agreed settlement, they are required to repay their investors’ money.
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