Missouri investors to receive $1.5 million in restitution

Restitution News Graphic

Secretary of State Jay Ashcroft’s Securities Division issued an order against Scottsdale, Arizona resident John D. Myers, and entities Skytec Security Services, LLC, and Skytec Service KC, LLC, finding they defrauded investors from the Kansas City, Missouri area.

Missouri Commissioner of Securities David Minnick found that respondents, individually and collectively, orchestrated and organized a scheme that defrauded eight Missouri investors by appealing to the desire for higher performance on their retirement savings.

In connection with the offers and sales, Myers, either directly or indirectly through business associate and fellow respondent Daniel S. Madasz, Sr., convinced them to invest in alternative investments in the form of illiquid and risky promissory notes to fund the growth and expansion of their fledgling businesses. Respondents promised investors large returns of 10-12% annually. Once in possession of the investors’ funds, however, respondents misappropriated the funds for their benefit and operated a Ponzi-like scheme in which new investor funds were used to pay earlier investors.

Most investors received virtually none of their investments back and in total, Missouri investors lost more than $1 Million to the scheme. Madasz is currently incarcerated in the state of Kansas for securities fraud committed during the same period of time with investors in Kansas. The division’s administrative proceeding relating to Madasz is pending upon his release from the Kansas Department of Corrections.

Following the investigation and an evidentiary hearing, Minnick found that respondents offered and sold $1,024,167 in unregistered, non-exempt promissory notes to eight elderly Missouri investors.

Minnick’s final order directs respondents to pay $600,000 in civil penalties, and more than $1.5 million in restitution including interest, and to pay investigation costs.

“This case shows how easily well-intentioned investors can be enticed by the prospect of high returns only to see their money disappear,” said Minnick. “If it sounds too good to be true, it usually is. Don’t deal with unregistered people who want your money.”

Secretary Ashcroft continues to urge Missouri investors to call the toll-free investor protection hotline at 800-721-7996 or visit the Missouri Protects Investors website for more information, or to file a complaint.