Home » Business » AZ Ponzi Scheme Con Artist Sentenced

AZ Ponzi Scheme Con Artist Sentenced

Arizona Attorney GeneralSedona AZ (June 19, 2015) – Arizona Attorney General Mark Brnovich is letting Arizona consumers know they may be eligible for financial restitution as a result of a recent conviction of a former Tucson con artist engaged in a Ponzi type investment scheme in Rocky Point, Mexico.

Herbert Ivan Kay arrested for Rocky Point Ponzi scheme

Herbert Ivan Kay arrested for Rocky Point Ponzi scheme

Herbert Ivan Kay, 57, formerly of Tucson, was sentenced on May 11, 2015, to five years in prison after being convicted of two counts of Fraudulent Schemes and Artifices on October 31, 2014. Over the course of thirteen years, Kay built a Ponzi-type scheme in which he infused business LLCs with new investor money, and then used that money to help pay for pre-existing business debts, obligations, and investment rights of failed venture capital projects.

Kay, who was stripped of his National Association of Securities Dealers (NASD) securities trading license in 2004, marketed and sold investments in residential and commercial developments in Puerto Penasco, Sonora, Mexico (Rocky Point).

“Herb Kay promised dreams and delivered nightmares,” said Assistant Attorney General Kim Ortiz of the Tucson office, who successfully prosecuted the case. “The Defendant completely disregarded fundamental standards of ethics, integrity, and honesty expected of professionals in the securities industry. Kay’s crimes were deliberate, motivated by his own financial gain, and he deserves every day of the prison sentence imposed.”

Federal Bureau of Investigation logoThe conviction followed a lengthy investigation conducted by the Federal Bureau of Investigation Phoenix Division, Tucson Resident Agency, resulting in an indictment from the Arizona Attorney General’s Office. Kay’s prison sentence will be followed by a consecutive term of probation, and he was ordered to pay more than $8 million in restitution to victims.

“The FBI is committed to investigating white-collar crime and fraudulent schemes and pursuing those individuals that perpetrate these acts,” said FBI Phoenix Special Agent in Charge Douglas G. Price. “Kay got away with his fraudulent activity over a thirteen year period, however, through the collaborative efforts of the Arizona Attorney General’s Office and the FBI, Kay will no longer be able to defraud the citizens of Arizona.”

AZ Attorney General SealMany of Kay’s failed enterprises hinged on false misrepresentations and material omissions made to new investors. In soliciting new investors, Kay did not disclose his NASD ban, or that previous investors’ notes from failed businesses were being rolled into new LLCs, which caused immediate share dilution. He also withheld from new clients that he had stopped paying interest payments on existing investor loans, and that the new investor money would be used to pay prior investors’ notes. Kay also misrepresented projected income statements and gross sales in soliciting new investors.

Victims should contact Amy Bocks with the Arizona Attorney General’s Office of Victim Services at amy.bocks@azag.gov to determine if they are eligible for a claim form. Victims’ restitution claims must be submitted to the court by Friday, July 10, 2015. Victims are encouraged to submit their completed claim forms through the Attorney General’s Office well in advance of this date.

Read www.SedonaEye.com for daily news and interactive views!

Read www.SedonaEye.com for daily news and interactive views!

Leave a Reply

Copyright © 2008-2017 · Sedona Eye · All Rights Reserved · Posts · Comments · Facebook · Twitter ·