He faces federal lawsuit over online operation
A Spokane County man has been accused of running an Internet-based Ponzi scheme that lured about 200 investors with promises of easy money on what turned out to be a bogus loan program.
The U.S. Securities and Exchange Commission says Craig Jolly pocketed at least $628,000 of the $4 million solicited from 200 investors, using it to pay for an all-terrain vehicle, tractor rentals, medical bills for a hand injury, a Toyota Tundra truck, tools, supplies and his own money-losing stock trades on E-Trade.
The SEC sued Jolly in federal court Monday, alleging securities fraud.
Jolly allegedly raised money by selling notes in his business, Quest Holdings Inc.
The SEC complaint charges that he told investors he was active in the investment community and financial markets, could earn them 19.5 percent interest, and had adequate reserves ensuring their money was safe.
He used the money paid by newer investors to pay “interest” to earlier investors. When Jolly learned last year that the SEC was investigating him, he attempted to shut down his Web site, called EarnByLoaning, according to charges filed in U.S. District Court. He transferred at least $100,000 to Panama and then to Belize, purportedly to buy an undeveloped real estate project, according to the charges.
SEC attorney Victor Hong declined to say if criminal charges may be pending.
He said financial accounts had been frozen to preserve some cash to repay duped investors from 37 states and 21 countries.
Jolly does not have a listed telephone number and could not be reached for comment Monday. Cell phone numbers for Jolly were either disconnected or not accepting calls.
Jolly acted as Quest Holdings’ president, sole shareholder and only employee. He worked out of his home in Airway Heights.
According to court records, Jolly asserted his Fifth Amendment rights against self-incrimination.
In one investor conference call last year, after declining to say how he would invest the money, Jolly dismissed worries about the legality of his business operation, according to the SEC.
“The other thing that people have to understand, too, is that the SEC is a very small organization and it governs the markets in the United States … The SEC has no time or interest in wasting their day looking around for somebody like us.”