The Securities and Exchange Commission yesterday filed a lawsuit in Minnesota federal court accusing a debt buying company and its owner of defrauding investors who committed nearly $3 million that was intended to buy portfolios of distressed debt that would be placed with third-party agencies for collections, some of which was instead used to cover the owner’s personal expenses. The suit also accuses the owner of lying about how the investors’ money would be protected, that she had never been sued in a consumer protection lawsuit, and omitted that she had twice filed for bankruptcy protection.
A copy of the complaint against Phoenix Asset Group and Robyn Bowman can be accessed by clicking here.
The company was formed in 2009 and in 2018, the owner devised the plan to start selling promissory notes to investors, who were told the funds would be used to buy portfolios of distressed debt. Between 2018 and 2020, the company raised $2.7 million by selling the notes to at least 20 investors. Investors were told that returns would be as high as 15%.
The owner is accused of using $860,000 from the company’s bank accounts for purposes unrelated to business. The funds were used to buy a home in Arizona, to make payments on houses and cars for the owner and her sister, to make payments on personal credit cards, to make payments to the owner’s children and nephew, and other personal expenses.
New investor money was then used to make payments to earlier investors.
In April 2020, the company told investors that it would stop making the required interest payments, blaming the COVID-19 pandemic by saying that the company was no longer receiving income because most states had implemented debt collection restrictions. Investors are still owed nearly $2 million, according to the complaint.
