LAS VEGAS (KLAS) — A Las Vegas mother and son are accused of raising millions of dollars as part of what the federal government is calling a fraud scheme where investors were told a supercomputer would net them big returns.
The Securities and Exchange Commission filed a complaint in federal court against Joy Kovar, 86, and her son, Brent Kovar, 54. The commission alleges the Kovars ran a Las Vegas-based company called Profit Connect Wealth Services.
According to the complaint, Profit Connect Wealth Services raised more than $12 million from nearly 300 investors.
“Defendants promised investors that their money would be invested in securities, bitcoin and other cryptocurrencies based on recommendation made by an ‘artificial intelligence supercomputer,’” the complaint stated. “Profit Connect claims that its supercomputer consistently generates enormous returns, which in turn allows Profit Connect to guarantee investors returns of 20%-30% per year with monthly compounds interest.”
“However, Profit Connect is a fraud,” the complaint continued.
Investigators allege the money was funneled in a “Ponzi-like fashion” to Joy Kovar’s bank account. More than 90% of Profit Connect’s funds actually came from other investors, according to the complaint. The scheme is alleged to have begun in May 2018.
“The complaint further alleges that the defendants did not use funds received from investors to trade securities, buy cryptocurrencies, or do any of the things that Profit Connect promised its investors it would do with their money,” a news release from the SEC stated. “Instead, the complaint alleges that the defendants misused investor money by, among other things, transferring millions of dollars to Joy Kovar’s personal bank account, paying millions of dollars to promoters, and making Ponzi-like payments to other investors. The complaint alleges that Profit Connect actively encourages investors to use money from retirement funds and home equity, and targets investors looking to build educational funds for their family.”
Payment includes at least $440,000 for a home purchased in January 2021 and $1.6 million spent on a number of credit cards, including one charge of $23,500 made during one trip to Costco, the complaint stated.
“As we allege, the defendants targeted investors who were looking for safe products for their retirements and their children’s educations, offering a money-back guarantee on top of the phenomenal results they promised to achieve using a purported ‘supercomputer,’” Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said in a statement “Investors should be wary of individuals and firms who guarantee double-digit returns with no risk of loss.”
A court froze the Kovars’ assets on July 14.
The complaint charges the Kovars with “violating the antifraud provisions of the securities laws. In addition, the complaint charges Joy Kovar as a control person for each of Profit Connect’s violations under the Securities Exchange Act of 1934. The complaint seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties,” a news release said.
The complaint was first filed July 8, but was unsealed last week.