SEC Sues Phoenix Asset Group For $2.7 Million Debt Buying Fraud

September 13, 2023 11:59 pm
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By Ben Miller
(Bloomberg Law) — Phoenix Asset Group LLC and its president allegedly conducted a fraudulent securities offering, raising at least $2.7 million for purported distressed debut portfolio purchases over a two-year period, the Securities and Exchange Commission said in a lawsuit filed Monday. Investors were led to believe that Phoenix would use the money generated by debt collection to pay returns of up to 15% on promissory notes they purchased, plus a share in the company’s profits, according to the complaint. But Phoenix President Robyn Bowman and her company allegedly lied to investors, using the company’s account for more than $860,000 in personal expenditures unrelated to the business, the suit filed in US District Court for the District of Minnesota says. Bowman allegedly used the money from investors to purchase a home in Arizona, to fund personal credit card purchases, and to pay family members, among other nonbusiness uses.  The defendants also also allegedly lied to investors by telling them that the debt portfolios purchased with their money would be insured and audited, and misrepresented that they had never been named in any previous consumer protection lawsuits, when in reality they’d been sued at least twice before for alleged violations of a consumer protection statute, according to the complaint.

The company and Bowman also allegedly misled investors by touting her credentials and business achievements, omitting that she had twice declared bankruptcy in 1999 and 2014. She filed for bankruptcy again in January 2023, but a court dismissed the petition with her consent last month, the complaint says. The scheme allegedly began in 2018, and Phoenix had stopped paying investors by April 2020. But rather than acknowledging that she had commingled investor’s money with her personal coffers, Bowman attributed the stopped payments to the Covid-19 pandemic and one of the collection agencies she had hired, while continuing to solicit new investments, the complaint says. Phoenix resumed making sporadic payments to investors in August 2020, but most investors received no more than three payments between then and early 2022. So far, Bowman and Phoenix have not repaid investors more than $1.97 million of their invested assets, according to the complaint. Bowman allegedly misled investors again in 2021 when she told them that Phoenix was set to receive an $8 million cash infusion from an Italian hedge fund, the complaint says.

The SEC seeks disgorgement from Bowman and Phoenix, as wellas civil penalties for violations of the Securities Exchange Act. Phoenix didn’t immediately respond to a request for comment. The case is SEC v. Phoenix Asset Group LLC, D. Minn., No. 0:23-cv-02775, complaint filed 9/11/23.

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