SEC Obtains Asset Freeze of North Carolina Couple Orchestrating $32.5 Million Investment Scheme
On September 8, 2009, the United States Securities and Exchange Commission ("SEC") announced fraud charges and an asset freeze against a North Carolina couple, Sidney S. Hanson and Charlotte M. Hanson, concerning an investment scheme that bilked $32.5 million from approximately 500 investors by falsely promising extraordinarily high returns.
The SEC has alleged that Mr. and Mrs. Hanson, ages 62 and 61 respectively, solicited investors at church gatherings and in other meetings, persuading the investors to cash out their retirement funds and invest in so-called private loan agreements that the Charlotte couple offered through a dozen companies they controlled (collectively, Queen Shoals Entities). Through their Web site and a sales force of at least 45 "consultants," the Hansons falsely promised investors that the investment contracts they were offering would generate yearly returns of from 8 to 30 percent, and that investors' funds would be safe in a diversified portfolio of Treasury Bills, precious metals, and foreign currency.
But the SEC has alleged that the Hansons and the Queen Shoals Entities never invested in Treasury Bills and invested very little of the investors' funds as promised. Instead, the SEC believes that the Hansons spent the majority of investor funds in a number of very risky private investment opportunities, and also misappropriated the money to pay personal expenses, sales commissions to their consultants, and to pay returns to investors in the couple's prior unsuccessful business ventures.
"As senior citizens themselves, the Hansons knew exactly how to appeal to other older investors, saying all the right things to convince victims to make all the wrong decisions with their retirement savings," said Cheryl J. Scarboro, Associate Director in the SEC's Division of Enforcement.