Your Moment of SEC Allegation Zen

From an SEC complaint today against a San Diego company it accuses of perpetrating a $50m scheme, your moment of SEC allegation Zen:

During this period, Khanna represented different annual rates of returns ranging from 17% to 27% per·year and 40% to 55% for terms ranging from 14 to 30 days. In some instances, he promised an additional 10% annual dividend. Khanna promised investors orally and through the prospectus that these returns were guaranteed. He even confirmed the inflated returns and the fact that they were guaranteed in each of the Notes given to investors.

Khanna further deceived investors by highlighting MAK l’s positive performance history in the prospectus which showed MAK 1′s purported monthly returns between 17% and 26% for mid-2004 to the present (with a cumulative 18 return of 321 % in 2008 alone). The prospectus also boasted MAK 1′s "proven" performance record over the past six years and particularly, its consistent double-digit returns, even during down markets.

Contrary to Khanna’s representations, several investors never received these returns. For some other investors; Khanna rolled over their ostensible returns upon expiration of the term of the Note. In early 2009, Khanna stopped making the promised payments to investors.

Gosh, but it sounded so good, right up until that last paragraph.

More here.

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