<p>According to the U.S. Securities and Exchange Commission (“SEC”), that SEC filed on August 12th, 2008 a civil injunctive action against Kay Services, LLC, and its sole owner and officer, Marcia Sladich, alleging that they orchestrated a Ponzi scheme raising more than $10 million from at least 1,000 victims, many of whom were members of the Family Federation for World Peace, formerly known as the Unification Church.</p> <p> </p>
<p><br /> The complaint alleges that Sladich repeatedly told investors that their money would be invested in domestic and international real estate that would generate substantial returns. Indeed, Sladich promised investors 50–100% guaranteed return on their investment in one year. She also promised investors additional payments for every investor they referred.</p>
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<p><br /> Sladich’s representations to investors were simply false. Throughout the scheme, Kay Services had no revenue-generating business or assets. Instead of investing in real estate, Sladich used investor money: (1) to pay Kay Services’ obligations to existing investors; (2) to pay Sladich’s personal expenses; and (3) to purchase real property and other assets for Sladich and her relatives. Sladich never disclosed any of these facts to investors.</p>
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<p><br /> The complaint charges the defendants with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In its enforcement action, the SEC is seeking an order permanently enjoining the defendants from committing future violations of the foregoing federal securities laws and a final judgment ordering the individual defendants to disgorge their ill-gotten gains and to pay civil penalties.</p>