The U.S. Securities and Exchange Commission has seized control of American Pension Services, a Riverton, Utah-based third-party administrator of retirement plans that oversees $300 million in assets.
The SEC is trying to track down $22 million that can't be accounted for. According to a press release issued by the SEC today, American Pension Services allegedly defrauded investors of millions in savings by misappropriating funds in high-risk and unauthorized investments, and then misled investors by inflating asset values.
Curtis DeYoung, CEO and president of APS, hid losses to clients, according to the SEC's investigation. DeYoung founded APS in 1982. APS oversees self-directed IRAs, Roth IRAs and 401(k) plans.
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APS's assets were frozen after a federal court granted the SEC's request to place the firm in receivership. Individuals with assets administered by APS have temporarily lost access to their accounts as the SEC carries out its investigation. The assets will remain frozen until at least May 9, the court's next scheduled hearing.
According to the SEC's complaint, APS's fraud dates back to 2005. DeYoung allegedly targeted customers with retirement accounts holding alternative assets not available to traditional IRA or 401(k) plans. As a plan administrator, APS and DeYoung had no authority to buy or sell assets with the money they oversaw.
DeYoung allegedly used forged letters and signatures to invest on behalf of customers, specifically in promissory notes issued by a friend's business that had never made a profit. DeYoung sent funds to the friend until April 2013, never disclosing APS customers that the friend's business had defaulted on the promissory notes in 2010, regulators alleged.
The SEC's complaint further alleges APS invested in other bankrupt ventures, and that APS concealed the losses and issued account statements that inflated the customers' assets, allowing APS to charge fees on worthless holdings.
When questioned by SEC investigators about the $22 million gap between actual holdings and those reported on account statements, DeYoung invoked his Fifth Amendment privilege against self-incrimination.
Diane Thompson of Ballard Spahr LLP has been appointed receiver by the court. "Our intent at this time is to safely secure all assets and accounts," Thompson wrote in a letter to APS's customers. Customers' frozen assets will be made available "as soon as possible under the circumstances."
Investors in with funds administered by APS can access the receiver and court documents at apsreceiver.com.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
