JEFFERSON CITY, Mo. – A Scottsdale, Arizona man and affiliated security service companies have been ordered to pay restitution for defrauding investors from the Kansas City, Missouri area through a Ponzi scheme.
The Missouri Secretary of State Securities Division found the scheme promised investors higher performance on their retirement savings in the amount of a 10-12% annual rate of return.
Authorities said John D. Myers and Daniel S. Madasz Sr. convinced victims to invest in alternative investments in the form of illiquid and risky promissory notes to fund the growth and expansion of their fledgling businesses, Skytec Security Services and Skytec Service KC.
However, once Myers and Madasz received money from investors, they misappropriated the funds for their own benefit and used the money to pay earlier investors.
Missouri investors lost more than $1 million as a result of the scheme. Most investors received virtually none of their investments back.
Missouri’s Securities Division ordered Myers and the companies to pay $600,000 in civil penalties, and more than $1.5 million in restitution including interest and to pay investigation costs.
Meanwhile, Madasz is currently incarcerated in the state of Kansas for securities fraud committed during the same period of time with investors in Kansas.